Speaking on the second anniversary of the Fair and Effective Markets Review, which was designed to help prevent abuse of the fixed income, currency and commodities (FICC) markets, Carney said the industry is “making enormous progress”.
He assured attendees at an event hosted by the FICC Market Standard Board (FMSB) that the UK would not see a “race to the bottom” to slash regulation post-Brexit. However he did suggest that the Bank may not maintain rules such as the cap on bankers’ bonuses, and the burdensome capital requirements for challenger banks.
Carney referenced developments such as the Senior Managers Regime – which attributes defined responsibilities to senior employees – and the move from Libor to Sonia as a new sterling interest rate benchmark as significant developments.
“The City has a special responsibility to address the root causes of misconduct, given its pre-eminent position in global markets,” said Carney.
“Drawing on the expertise of its members, the FMSB has finalised standards that codify best practice with respect to reference price transactions, commodity binary options, and new bond issues.”
He said he was confident that these standards would help to “reverse the tide of ethical drift” in markets since they are “part of a much broader effort by UK authorities and market participants”.
“We are moving from markets that collapse when there is a shock from abroad to markets that are resilient,” he added.
Carney also announced that the Working Group on Sterling Risk-Free Rates, a market-led group initiated by the Bank and the Financial Conduct Authority (FCA), would be taking charge of the move from Libor to Sonia over the next four years until Sonia is implemented.