UK: Fair And Effective Markets Review: The Recommendations

On 10 June 2015 the Final Report of the  UK's Fair and Effective Markets Review (FEMR) was published setting out the conclusions of the review and recommendations as to how to improve the wholesale fixed income, currency and commodities (FICC) markets.

The FEMR is the UK government's flagship response to addressing the widespread perception that FICC markets are prone to abuse. HM Treasury, the Bank of England and the Financial Conduct Authority jointly published the final report, laying out six key principles and a wide-ranging set of recommendations.

Many of those recommendations overlap with EU policy initiatives already in development (the EU Benchmark Regulation, the Market Abuse Regulation and, to some extent, MiFID II). How they will eventually work alongside these EU laws remains to be seen.

Key proposals arising from the FEMR include:

  • FICC Markets Standards Board (FMSB) to help improve market-wide understanding and convergence of standards (by setting guidelines, producing case studies and other materials)
  • Establishing a new regulatory regime for spot FX activity (including civil and criminal market abuse sanctions and the establishment of a new global code of practice for spot FX activity)
  • Extending individual accountability (including extension of the Senior Managers and Certification Regime to more FICC firms and broadening the criminal sanctions for market abuse)

The FEMR's terms of reference and key conclusions


  • Seeks to identify the causes of the misconduct which have recently tarnished the reputation of the FICC markets
  • Considers the scope and impact of changes already being implemented in relation to how the FICC markets work
  • Seeks to identify where there were gaps and suggest how to fill them

Key areas of concern identified by the FEMR are:

  • Market structures
  • Standards of acceptable market practices
  • Systems of internal governance and controls
  • Limited reinforcement of standards through bilateral market discipline
  • Remuneration and incentive schemes
  • The perception that misconduct will go undetected

While acknowledging that steps have been taken, the FEMR identifies issues which are not addressed, or not fully addressed, by the current reforms, including:

  • Raising the levels of professionalism and accountability for individuals in FICC markets
  • The lack of an effective structure for agreeing and establishing common standards of practice
  • Gaps in the regulatory framework in FICC markets
  • Raising the general standard of conduct in FICC markets

The FEMR's Recommendations

The Final Report sets out 21 recommendations under six key principles.

Below is a summary of the recommendations for each of the six principles.


  • Developing a global, and easily understandable, set of common trading practices in FICC markets which should be upheld in a consistent way
  • Imposing new training expectations and qualification standards for individuals operating in the FICC markets, and ensure that the training obligation is an on-going obligation
  • Putting in place a system whereby employers can identify any past regulatory or conduct issues in relation to new hires
  • Extending UK criminal sanctions for market abuse for individuals and firms to cover a wider range of FICC-related instruments
  • Raising the maximum sentence for market abuse from seven to ten years


  • Establish a FICC Market Standards Board made up of senior representatives from a cross-section of global and domestic firms and end-users, which will:
    • Conduct horizon-scanning (for new trends and threats) and report on emerging risks
    • Address areas of uncertainty in specific trading practices by producing guidelines, practical case studies and other materials
    • Promote good practices on control and governance structures around FICC business lines
    • Contribute to international convergence of standards


  • Bringing seven additional UK FICC benchmarks into the UK regulatory framework (this has already been implemented by HM Treasury on 1 April 2015);
  • The creation of a new civil and criminal regime to deal with market abuse for spot FX;
  • Ensuring that there is proper management of conduct in the FICC markets through monitoring compliance with the standards required by the Senior Managers and Certification Regimes
  • The extension of the Senior Managers and Certification Regimes to cover a wider range of firms operating in the FICC markets
  • Improving the understanding of both firms and traders as to how competition law applies to the FICC markets


  • Agreeing a single global FX code (including principles for conduct, standards for venues and tools for promoting adherence)
  • Improving the controls and transparency around FX market practices (including last-look and time-stamping)
  • Providing guidance to benchmark administrators and ensuring that adopt a more consistent approach to self–assessment against IOSCO Principles, with guidelines for benchmark users
  • Looking at improving the relationship between remuneration and incentives and conduct risk at a global level


  • Improving transparency while not limiting the benefits of having a diverse range of trading models
  • Promoting choice, diversity and access by monitoring, and taking action to prevent, anti-competitive conduct
  • Encouraging the market to lead reforms, previously held back by a failure of the private sector to co-ordinate


  • Quickly identifying conduct risks created by existing and new market structures and practices
  • Improving the monitoring of trading patterns and behaviours by firms and authorities
  • Adopting forward looking supervision of FICC markets

What does all of this mean in practice?

Where these recommendations will lead remains to be seen.

Key questions arise: What will be the legal and regulatory status of guidance produced by the FMSB? Will the FMSB's existence coincide with a reduction in the level of available guidance from the FCA? How will the FMSB, FCA and ESMA interact?

But one thing is certain: We can expect a greater degree of oversight and more enforcement across the FICC marketplace. The FEMR represents another step in the general trend to focus on individual accountability. It would surprise few if this flagship reform were sooner or later to be accompanied by severe sanctions against some individuals operating in these markets.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.