This Wednesday the Bank of England, Treasury and the Financial Conduct Authority will publish recommendations from their Fair and Effective Markets Review into conduct and operation of currency, bond and commodity markets.
In the wake of Libor and FX fix "manipulation" the report is expected to make an extensive and far reaching list of plans
Martin Wheatley, FCA Chief Executive and co-chair of the review, told Reuters that
"It is going to say some quite significant things about what the scope of regulation should be for asset classes that historically have not been heavily regulated"
The review will focus on how to raise standards of behavior among traders at banks, recommend tougher sanctions and give markets more detailed guidance on what are acceptable trading practices.
Some expect a new independent body to help with providing guidelines on market practices and enforce a new global code of conduct that central bankers are already working on.
Wheatley said, for example, there was a need to determine more clearly when legitimate hedging in markets becomes abusive "front-running," where banks use information to trade on their own account ahead of customers.
As a former interbank market maker who plied his trade in these under-regulated markets for many years I have a few thoughts on what might, or might not, be considered "bad practice" but I'll take a look at the report first and give you some feedback on Wednesday.
I will say, however, that they should be careful not to throw the baby out with the bath water
Reuters has more here
