Download Report

Ethical Behaviour in the Financial Markets Industry Moving “From Industry to Profession”
Management Summary
The financial services industry is facing a
severe challenge in the aftermath of the
global crisis and a number of
fixing/benchmarking scandals.
Demonstrating best practice to the
Board, clients, shareholders, staff and
general public is of prime importance. ACI
Financial Markets Association (ACI FMA)
can be the perfect partner to assist you
with this, both within your country of
residence, and globally.
ACI FMA has an existing asset in The
Model Code of Conduct that sets out both
a wider code of conduct as well as a large
number of specific examples as to how
professionals in the wholesale markets
should behave. The Model Code is
endorsed by a number of regulators and
central banks, and is acknowledged as
the current definition of best practice. To
support the ACI FMA in continuing to
promote best practice, and to visibly
demonstrate its commitment to the
highest expectations of ethical conduct,
puts you in a leadership position relative
to your local and international clients and
regulators.
functions across jurisdictions the ACI FMA
has targeted institutions to sign-up for
ELAC to enable this work.
ELAC – ACI’s eLearning & Annual
Certification Portal allows institutions to
embed The Model Code within their wider
compliance-learning programme and
offers a true up-to-date transparent
“industry sourced” compliance
continuous learning portal helping
institutions to recognize the risks and
actively implement the necessary cultural
change in financial markets. ELAC can be
implemented alongside existing in-house
learning as a ‘standard’ that crosses
geographies and institutional
approaches, in the sure knowledge that
regulators and central banks across the
world are recognising this as a
behavioural standard.
This is far more than developing an elearning tool. At a time of poor public
perception regarding behaviour within
the wholesale markets, the ability to point
to a neutrally recognised ‘badge’ that
demonstrates most strongly the
institution’s support of a global
behavioural standard is of immense
value. Institutions that are visible in their
concrete actions to assist the industry will
be rewarded in numerous ways. In
sponsoring and supporting the ACI FMA,
eligible industry staff can benefit from the
individual membership scheme, with a
wide variety of local ways to participate.
Institutionally, will be recognised among
the emerging leaders on ethical conduct,
and appreciated for its commitment to
this area. This is what ACI FMA offers to
Industry.
In order for the Model Code to be
developed on an ongoing basis, as well as
to be made available to compliance
Background
Conduct risk is of keen interest currently
and many institutions are wrestling with
how best to best mitigate the risk, and
enhance their individual staff
accountability and awareness. This is less
straightforward than it may at first
appear, as it is less about a single piece of
legislation and more about elements of
others such as Markets Abuse Directive
(MAD) in EU or the Dodd-Frank Act in the
US, or indeed codes of conduct that have
been published by the authorities in their
jurisdictions. Many have acknowledged
the ACI FMA Code of Conduct as the basis
for a global approach. (example: Global
Preamble – Global FX Committees.
© ACI The Financial Markets Association
Following the fines and other sanctions
that are attached to the LIBOR
investigations, and the alleged wrongdoings that are subject to investigation in
the FX fixings area, the behaviour of front
office staff is under a focused scrutiny.
Coupled with the new more high-profile
approach that regulators are taking
around the world, with record fines and
the threat of management being held
personally responsible, it is no surprise
that conduct risk is high on the agenda.
Educating staff on the correct ethical
standards, based both upon fundamental
guiding principles as well as actionable
process, is required. A management-led
programme must be in place. There are
technical elements such as monitoring of
chat conversations, education and testing
of staff to demonstrate that they
understand and subscribe to a code of
behaviour and the deeper cultural change
that becomes embedded within the firm’s
cultural DNA.
The ACI FMA is positioned to help
mitigate at least part of this risk and in
doing so, help financial institutions
address the challenge of how to
demonstrate best practice, both to their
regulators and to the wider public.
1
ACI FMA
The ACI FMA is a leading non-profit, nonpolitical association of wholesale financial
market professionals. Members of ACI
FMA are for the most part engaged in
professional trading, broking, operations,
regulatory and compliance activities in
foreign exchange, money, fixed-income
and derivatives markets. ACI was founded
in Paris in 1955 as Association Cambiste
Internationale and has a proud and
illustrious history of helping its
membership through various market
iterations/interactions. ACI FMA currently
counts some 13,000 international
members from 68 countries, with
growing interest globally. A significant
difference between ACI FMA and other
associations is that ACI FMA has
individual (not institutional) membership.
This is a clear differentiator and means
that ACI FMA is not constrained as only a
“banking industry voice” but provides
supportive training for the buy-side and
the sell-side..
There are three core benefits that ACI
FMA brings to the industry:
•
•
•
ACI Code of Conduct – The Model
Code - with testable and practical
applications
Education on best practices
Professional networking
opportunities
Professional networking is a visible ACI
FMA benefit, connecting members to a
global expanse of clients and fellow
practitioners and is well recognised.
The ACI FMA suite of education
examinations is recognised by many
jurisdictions, and in some is a
prerequisite for an individual to begin
trading in their wholesale markets. The
education suite includes the Dealing
Certificate and Operations Manager
Certificate, both of which have long
included a proportion of the exam that
examines the ACI FMA Model Code of
Conduct. This provides evidence to
interested parties of the importance
placed on the highest standards of
practice and ethical conduct.
The Model Code is a global industry
standard, officially endorsed by over 15
countries’ central banks/regulators, with
active participation in its maintenance by
all sides of the industry via the ACI FMA
Committee for Professionalism (CFP). The
Model Code is monitored and maintained
by the CFP and includes members from
banks, brokers and customers. Additional
feedback and suggestions are submitted
from central banks and regulators.
Here is an illustration of the ACI’s Code of Conduct: The Model Code benefits when compared with the other forms of codes in various
jurisdictions
Attributes
The Model
Code
NIPS Code
FED NY JSC
Tokyo Code
“Bankers” Oath
Individual Bank
Codes
Y
some
Up-to-date 2015
Y
Up-to-date in 2010-14
Y
Regionally accepted by members
Y
Y
Y
Y
Globally accepted by members
Y
N
N
N
N
Written by a diverse group of constituents
Y
Governed by non-partisan, non-profit organisation
Y
Y
Y
Y
Y
Accepted by over 13,000 professionals
Y
Directly applies to FX and other OTC markets
Y
Y
Y
Y
Y
Y
Y
Regionally focussed Code
Globally focussed Code
Y
Has positive impact on “frontier markets”
Y
Provision made for training and education
Y
Continuous self-certification available
Y
Rigorous exam on code of conduct publically available
Y
Used as basis for many other codes
Y
Directly addresses recent conduct issues
Y
Written with commercial incentives in mind
N
© ACI The Financial Markets Association
Y
Y
Y
some
some
N
N
N
Y
2
RECENT PRESS
February 19, 2015
City of London ‘black book’ is called for to track ‘bad apple’ traders
...information about traders who break rules, in order to prevent “badapples...one
firm to another, a group of industry...proposal for an industry-wide “black book”
recording why traders leave a company is one ofthe...cleaning up
the City of London from a panel...
Martin Arnold and Caroline Binham in London
“Ms Corley says the key areas of focus are the structure of the fixed income, currency and
commodity markets and the conduct of traders, which make up a big chunk of activity in the
City and other financial centres.
She has no doubt that trader conduct is the area in need of most attention. “Changing the
attitudes of managing directors and those on the first line of defence on the trading floor is
absolutely key,” she added.
However, she plays down the idea of establishing a licensing regime for traders or a
professional standards system requiring them to all take exams to qualify. “We are not
saying it’s a bad idea but we are saying it’s not the panacea. Many of these issues we face
are not technical qualification issues, they are conduct and ethical issues.”
Instead, she recommends that traders are required to make an annual attestation that they
have complied with their code of conduct — preferably one that is included in their
employment contract. She says the approved persons register, which is in the process of
being replaced by regulators, should be maintained and improved as a vehicle for the
industry to share notes on “bad apples”.
She also calls for the establishment of an industry-financed body to develop common codes
and standards for the sector. Ideally, these could also be promoted globally”.
bba
4th February 2015
British Bankers Association: “licence to trade” qualifications and tougher codes of
conduct will strengthen trust in financial markets
The BBA supports the objectives of the review and sees reform as vital to restore trust and
confidence in financial markets and believes it is important for the UK to play a leading role
in shaping the global agenda.
As such the BBA submission makes a number of positive proposals for policymakers to
consider:
“Licence to trade” qualifications for all in financial markets. The BBA believes
that everyone undertaking activity in wholesale FICC markets should be required to pass
exams and become professionally qualified. This would not need to be one single
qualifications for all markets but policymakers should work with the industry to identify
which qualifications should be recognised as giving a “licence to trade”.
Giving “teeth” to codes of conduct. Global principles should be implemented nationally
and explicitly endorsed by regulators so that they are given “teeth”. These should then be
integrated into company and board mission statements, job descriptions and remuneration
policies, with proof of continuing adherence for individuals being required in annual
appraisals, promotion requisites or mandatory regular face-to-face training courses.
© ACI The Financial Markets Association
3
How it works:
Step One: Sign up eligible staff for membership in ACI FMA, either via their National
Association (if possible) or as a Direct member in ACI FMA International.
Step Two: Sign up eligible staff for the ACI ELAC Portal, and begin seeing the benefits
of the behavioural education.
Step Three: Engage with the ACI FMA internationally across any of a number of
networks, working groups, formal ACI FMA Committees, or participate in our on-going
education
Contact ACI FMA to discuss further. All discussions are confidential.
Contact ACI FMA Latin America
www.acifma.com/latinamerica
[email protected]
www.acifma.com
ACI – The Financial Markets Association
8 Rue du Mail, Paris 75002, France
Marshall Bailey, CFA, President ACI
[email protected]
Tel: +33 1 42 97 51 15 (Paris)
Tel: +44 207 537 6250 (Londres)
© ACI The Financial Markets Association
4