The FICC Markets Standards Board (FMSB) published the final version of a Statement of Good Practice on the issue of Conflicts of Interest in early October. The guidance is intended to give organizations practical, working level direction and examples to learn from as they determine how to prevent and mitigate conflicts of interest that arise within their enterprises.
More specifically, the Statement of Good Practice has been published as part of FMSB’s commitment to improving conduct risk management in the wholesale Fixed Income, Currencies and Commodities markets. It was issued previously as a Transparency Draft and the final version takes account of comments and feedback received from market participants and FMSB members.
The FMSB’s Statement of Good Practice suggests periodic reviews within each business area of an organization to identify situations that could potentially create a conflict. The statement also recommends ensuring the appropriate identification and escalation procedures are put into place for actual conflicts.
There are eight specific Good Practice Statements the FMSB has issued for firms to consider in managing conduct risk surrounding conflict of interest. They include:
- having the necessary policies, procedures and training in place across a firm;
- having senior management provide oversight and governance around how conflicts of interest are identified and managed; and
- having controls in place to either prevent conflicts of interest from arising, as well as managing or mitigating those that do arise.
For more information, consider reading a recent article on the subject in Regulation Asia or the FMSB press release on the group’s website. Or see how MCO can help your organization address the challenges of managing Conflicts of Interest Risk.