Traders could be held to account by City watchdog

A new regulatory regime in the City of London intended to hold individuals to account for their actions could be extended to traders who had not expected to be covered by the rules.

The Financial Conduct Authority launched a consultation on Tuesday that could result in managers working in areas such as algorithmic trading and high-frequency trading being included in the regime which is being introduced in the wake of the Libor rigging scandal.

As the City regulator published rules that cover a range of roles from top bosses to junior branch staff, it added that it wanted to broaden the scope of its new powers to fine and ban individuals.

The FCA said it was “also consulting on amendments to the rules in regard to the certification of individuals involved in wholesale activity, such as traders”.

“The change is designed to expand the certification regime to ensure that individuals working in wholesale markets in relevant firms who could pose significant harm to the firm or its customers are subject to the new accountability rules,” it added.

The new regulations are the result of the parliamentary commission on banking standards, chaired by Conservative MP, Andrew Tyrie, and set up by the previous government after the furore caused by the £290m fine imposed on Barclays for rigging Libor.

Individuals who fall under the FCA’s senior managers regime will need to be preauthorised by the FCA before they can take up their roles. Those who fall under the certification regime – also part of the new rules – will not need preauthorisation but it covers anyone who could cause a risk to their firm, from Libor traders to staff who give investment advice.

They will be subject to the new conduct rules which set out basic standards for how individuals behave.

Some non-executive directors of banks, however, are not covered by the senior managers regime. Chris Lawrenson, head of legal services at the Building Societies Association, said this meant junior members of staff would be held to account but a large number of non-executive directors would not.

He said any errors by junior workers covered by the certification regime would need to be reported annually to the regulator, when they might otherwise have been handled by their managers. “The culture of fear which could result from branch staff being personally liable to the regulator is likely to cause not prevent customer detriment and will very likely make the potential of a conversation with a customer a distant memory, replaced by the delivery of a script,” the BSA said.

Powered by article was written by Jill Treanor, for The Guardian on Tuesday 7th July 2015 19.33 Europe/London © Guardian News and Media Limited 2010


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