The Governor of the Bank of England will unveil plans on Wednesday for a new City body with a remit to promote standards in financial markets following a string of multi-billion pound trading scandals.
According to a report by Sky News, the incumbent Bank of England Governor Mark Carney will announce the creation of the Fixed Income Markets Standards Board (FMSB) as part of the Fair and Effective Markets Review (FEMR), which was ordered a year ago by George Osborne, the Chancellor.
Sources said on Monday that Mr Carney would announce at the annual Mansion House dinner that the FMSB will be chaired on an interim basis by Elizabeth Corley, the chief executive of Allianz Global Investors, who has been closely involved with shaping the City’s response to the FEMR.
The FMSB is unlikely to have any formal regulatory powers, and will be funded by the industry practitioners which provide fixed income, currencies and commodities services to corporate clients, potentially raising questions about its independence.
However, Mr Carney is expected to say that the new panel will play an important role in assisting with the clean-up of the City by acting as an interface between the suppliers and users of wholesale banking services.
A number of global banking groups have already agreed to provide public support for the new body, insiders said.
The Chancellor and the Governor are determined that the FEMR is seen to have teeth, having been commissioned in the wake of huge fines for banks that were involved in rigging Libor and other benchmark interest rates, and foreign exchange markets.
A person close to the Bank of England said that the recommendations of the review would also have the backing of major central banks and the Financial Stability Board, which Mr Carney chairs, lending it greater credibility.
“It is going to say some quite significant things about what the scope of regulation should be for asset classes that historically have not been heavily regulated,” Martin Wheatley, chief executive of the Financial Conduct Authority (FCA) and co-chair of the review, told Reuters last week.
The industry is expected, nevertheless, to question the efficacy of the FEMR if it does not propose specific sanctions for those who break the rules.
A source said that the FEMR would not recommend the creation of a formal licensing regime for those who work in FICC markets.
A new referencing regime which will oblige employees and their former employers to disclose cases of misconduct will be among the review’s central recommendations, but could be subject to legal challenges under human rights legislation, insiders suggested.
That new requirement is likely to be integrated into an extension of the Senior Managers’ Regime – which places additional responsibilities on the risk-taking employees of major banks – which will encompass a broader range of financial services companies.
The Bank of England and Allianz both declined to comment.