The new Senior Managers Regime already applies to bankers and top insurance company executives and will now be extended to all firms active in wholesale fixed income, currency and commodity markets, governor Mark Carney said in his Mansion House speech.
“That means all senior managers would have clearly defined responsibilities and would be answerable for training, certifying and monitoring the material risk takers they supervise.”
Carney said the Financial Conduct Authority should redeploy resources to ensure compliance with the new regime.
“In turn, these individuals would be on the hook for promoting compliance within their organisations. Incentives will be aligned,” he said.
“For the best in the industry, this won’t be new. This is just how you run your business. But for others, who free ride on your reputations: the Age of Irresponsibility is over.”
The governor said these reforms were needed because of a rise in unethical behaviour across the markets uncovered since the financial crisis, which has included price fixing in the currency markets and illegal rate setting in the interbank funding market.
“Too many participants neither felt responsible for the system nor recognised the full impact of their actions.”
Carney also announced that regulators should extend the coverage of market abuse rules to include every major fixed income and currency market. And criminal sanctions should be updated in order to lengthen maximum prison terms.
He said the Bank of England would hold an Open Forum this Autumn to bring together all stakeholders in FICC markets in order to discuss the prospects for market functioning, where regulations might overlap or conflict, and whether enough has been done to build the real markets the UK deserves.
