FICC Markets Group Issues Best Practice Guidelines

The FICC Markets Standards Board (FMSB) has published the final version of its Statement of Good Practice (SGP) on Suspicious Transaction and Order Reporting.The FMSB is an independent body set up by market practitioners to try and improve standards of conduct in wholesale FICC markets. It aims to bring transparency to grey areas in the wholesale FICC markets by identifying emerging vulnerabilities, clarifying and documenting practice and agreeing standards to improve conduct and market behaviour. Setting up the FMSB was one of the main recommendations to emerge from the Fair and Effective Markets Review (FEMR), which was conducted by HM Treasury, the Bank of England and the Financial Conduct Authority (FCA).
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ESMA Renews CFD Restrictions

The European Securities and Markets Authority (ESMA) has agreed to renew the restriction on the marketing, distribution or sale of contracts for differences (CFDs) to retail clients. The rule, which has been in effect since 1 August 2018, was due to expire on 1 February 2019 but has now been renewed for a further three-month period. ESMA says it has “carefully considered” the need to extend the intervention measure currently in effect, adding, “ESMA considers that a significant investor protection concern related to the offer of CFDs to retail clients continues to exist.”
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Tarbert Lined Up for CFTC Chair

Heath Tarbert is to be nominated by the US government to be the next chair of the Commodity Futures Trading Commission. His appointment is subject to Congressional approval, however he was appointed to his current role at the US Treasury by the US Senate with a huge majority and is expected to attract similar support. Tarbert will take the reins of the US regulator from Christopher Giancarlo, who was appointed to the role in 2017 and is due to step down at the end of April 2019
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FCA Seeks to Cement CFD, Binary Options Rules

The UK’s Financial Conduct Authority (FCA) has issued two consultation papers ahead of the imposition of rules to address what it terms “harm to retail consumers from the sale of certain complex derivative products”, specifically retail –orientated contracts for difference (CFDs) and binary options. The proposed rules would apply to firms acting in or from the UK and ban the sale, marketing and distribution of binary options, as well as restrict the sale, marketing and distribution of CFDs and similar products to retail customers.
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10 Firms Join to Create Code of Conduct for Digital Asset Markets

Ten financial services and technology firms leading developments in the digital asset and blockchain space have joined together to create the Association for Digital Asset Markets (ADAM) to establish a Code of Conduct for emerging digital asset markets. US-based ADAM will proactively seek comprehensive standards for digital asset market participants. The group, which includes BitOoda, BTIG, Cumberland, Galaxy Digital, Genesis Global Trading, GSR, Hudson River Trading, Paxos, Symbiont and XBTO, says it will work with current and former regulators to provide rules for the efficient trading, custody, clearing and settlement of digital assets. Future guidelines will encourage professionalism and ethical conduct by all market participants, increase transparency by providing information to regulators and the public, and deter market manipulation, the group stated.
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ISDA Publishes Responses to Benchmark Consultation

The International Swaps and Derivatives Association, (ISDA) has published a statement summarising the preliminary results of a consultation on technical issues related to new benchmark fallbacks for derivatives contracts that reference certain interbank offered rates (Ibors). The consultation, which was launched in July, covered the proposed methodologies for certain adjustments that would apply to the fallback rate in the event an IBOR is permanently discontinued. ISDA says it received 152 responses from 164 entities to the consultation from a variety of market participants.
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FSB Publishes Final Report on Compensation

The Financial Stability Board (FSB) has published its finalised Recommendations for national supervisors: Reporting on the use of compensation tools to address potential misconduct risk. The work started in 2015 when the FSB published its Workplan on Measures to Reduce Misconduct Risk through the promotion of incentives for good behaviour. This work promoted the adoptions of standards and codes of behaviour, such as the FX Global Code, and reforms to benchmark-setting practices; A toolkit of measures to address misconduct in wholesale markets developed by the International Organization of Securities Commissions (IOSCO), based on national approaches; additional guidance on the use of compensation tools to promote good conduct; and a toolkit to strengthen governance frameworks to mitigate misconduct risk.
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UK Gets New Libor Transition Head

The Bank of England and the UK’s Financial Conduct Authority (FCA) have announced the appointment of Tushar Morzaria as the new chair of the Sterling Risk Free Reference Rates Working Group. The group was established in 2015 to implement the Financial Stability Board's recommendation to develop alternative risk-free rates (RFRs) for use instead of Libor-style reference rates. In April 2017, the Working Group recommended the Sonia benchmark as their preferred RFR and since then has been focused on how to transition to using Sonia across sterling markets.
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FSB Reports “Good Progress” on OTC Derivatives Reform

The Financial Stability Board (FSB) has issued two reports studying the implementation of its reform programme for OTC derivatives markets and says that “good progress” continues to be made across its agenda. Studying the period from end-June 2017, the report concludes that 21 out of 24 FSB member jurisdictions have comprehensive trade reporting requirements in force, up by two since end-June 2017. The three to yet put the reporting frameworks in place are Argentina, South Africa and Turkey, however the FSB says the three have made “some progress” in that period, particularly Turkey.
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CFTC Fines Ex-Deutsche Trader for Hiding Swaps Losses

The US Commodity Futures Trading Commission (CFTC) has fined a former Deutsche Bank inflation swaps trader for attempting to cover up losses. The Commission has also closed its related investigation into the bank, citing its self-reporting of the incident and its cooperation. CFTC says it has filed and settled charges against Jacob Bourne, a former managing director at Deutsche for fraudulently mismarking swap valuations to conceal trading losses of $16 million. The CFTC Order requires Bourne to pay a $350,000 civil penalty and permanently bans him from trading on exchange and seeking registration with the CFTC, among other prohibitions.
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