FCA Accountability rules for wholesale traders


06 February, AtoZForex.com, Lagos – The Financial Conduct Authority (FCA) has published the final rules confirming their approach to improving individual accountability for those who intend carrying out wholesale trading activities, which includes algorithmic and high-frequency trading in banks, building societies and Prudential Regulatory Authority (PRA) designated investment firms. Aspects of the regime’s territorial application were also clarified.

New FCA accountability rules

The new FCA accountability rules are part of the framework introduced by the FCA and the PRA with the aim of strengthening individual accountability within banking sectors. Meaning that the certifications regime will now include those performing two new functions; client dealing functions and the algorithmic trading functions. The publication today came after the final rules that were published in July 2015 for UK RAP and December 2015 for Foreign Branches.

The rules come into effect on March 7, 2016 with September 7, 2016 as its deadlines for firms to apply. The final rules will be followed by a transition period to allow for implementation of changes by firms. The conduct rules also applies to individuals outside the senior managers and certification Regimes from March 2017.

According to Tracey Mcdermott, acting Chief Executive of the Financial Conduct Authority, “today we made roles that will extend the certification regime to more fully capture people carrying out certain wholesale activities”.

He added “we are determined to embed a culture of personal responsibility within the banking sector. Clear individual accountability should focus the mind, drive up standards, and make firms easier to run and supervise. And if things go wrong, it will allow senior mangers to be held accountable for misconduct that falls within their area of responsibility”.

Accountability reforms

The FCA added that this wide package of accountability reforms also includes proposals for regulatory references for candidates applying for senior manager and significant harm functions under the certification regime in banks, building societies, credit unions, PRA-designated investment firms and insurers.

The FCA has assured its commitment to implementing a more comprehensive framework for regulatory references later in the year. Recently, the UK financial regulator also launched an open letter to CEOs of CFDs firms, titled “Client take-on review in firms offering contract for difference (CFD) products.”

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