FMSB Finalises Market Colour Best Practice

The FICC Markets Standards Board (FMSB) has published the final version of a Statement of Good Practice on the issue of Information & Confidentiality, which seeks to bring clarity to what it terms the complex issue of sharing information in fixed income and commodities markets and dealing with confidential information within a firm.

FMSB says that recent events have highlighted the risks associated with the sharing of information; and have suggested that there is uncertainty amongst market participants as to the type, and nature, of information that can be shared (whether internally or otherwise). It adds that the Statement of Good Practice, which was previously published as a draft and has taken into account feedback to that draft, seeks to provide examples of the types of information that cannot be shared, as well as the circumstances in which certain market colour may be shared and how the potential impact of this should be managed and notified to clients of firms.

There are nine Good Practice Statements which firms should look to when considering their own practice and cover issues, FMSB says, including the management of data integrity; how and in what circumstances client confidential information may be shared with third parties; and what can and cannot be discussed when providing market colour.

In particular, the document states, “The timely and appropriate exchange of market colour between market participants can contribute to an efficient, open, and transparent market through the exchange of information on the general state of the market, views and anonymised and aggregated flow information,” and discusses how this may be achieved.

Colin Lambert

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