Following consultation feedback[1], the Financial Conduct Authority (FCA) is today confirming that it is recognising the following voluntary market codes of best practice under its codes recognition scheme:
- FX Global Code[2] – maintained and updated by the Global Foreign Exchange Committee, this Code sets global principles of good practice standards in the foreign exchange (FX) market, promoting the integrity and effective functioning of the wholesale FX market.
- UK Money Markets Code[3] (MM) – maintained and updated by the Money Markets Committee, this sets standards and best practice expected from participants in the deposit, repo and securities lending markets in the United Kingdom.
Both these codes have been written and are owned by the industry and reflect their views of best practice.
The FCA established its codes recognition scheme last year for recognising industry codes for unregulated financial markets and activities. The FX and MM Codes are the first codes to be recognised by the FCA.
Individuals subject to the Senior Managers and Certification Regime (SM&CR) need to meet the requirements for market conduct, for both regulated and unregulated activities. Behaviour that is in line with an FCA recognised code, such as the FX and MM Codes, will tend to indicate a person subject to the SM&CR is meeting their obligation to observe ‘proper standards of market conduct’.
The FCA consulted on recognition of the codes in December 2018[4]. The consultation responses all agreed that they met the recognition criteria and that the FCA should recognise both.
The FCA’s SM&CR rules have not changed as a result of our code recognition scheme, nor has its powers or the circumstances in which it supervises or enforces its SM&CR rules. Firms and their Senior Managers, under the SM&CR, are expected to train, monitor and where necessary, discipline their staff in relation to the Individual Conduct Rules.
Following recognition, the FCA will not supervise firms or individuals directly against these codes in unregulated markets. The FCA’s role is to make sure that firms meet their governance and systems and control obligations, including under the SM&CR. The FCA expects firms and individuals to consider both the spirit and letter of code provisions to make sure they fully meet ‘proper standards of market conduct’.
For more information on the codes recognition process, please refer to the FCA’s recognised industry codes pages[5].