Market misconduct has been a recurring theme in financial markets for centuries. The last decade has seen an unprecedented global focus on improving the fairness and effectiveness of wholesale markets, and the consequent impacts on financial services firms have been vast. Public trust in wholesale markets has been shaken; banks have been issued with significant fines and settlements in the last 10 years; legislation has been introduced in many countries to enforce individual accountability; and the ongoing cost of control and remediation is placing significant overhead pressures on efficiency and profitability. Regulators have also been very clear that standards must be maintained in the COVID working environment, and will therefore be renewing their focus on conduct and culture.

While the challenges of managing wholesale conduct are significant, firms are continuing to develop ways to more effectively mitigate the risk and to embed sustainable change in front office, oversight functions and key support teams. KPMG is at the forefront of this effort, working with the largest financial services firms and industry bodies to define and implement governance, risk and control frameworks. We have an in depth understanding of the regulations, industry standards and emerging good practice. This has enabled us to support a wide array of financial services firms by delivering advisory, assurance and change management services.

To meet regulatory expectations, enhance efficiency and reduce costs, we have developed a range of technology solutions to support digitalisation and automation of control processes. This can be adapted to a range of use cases across front office and controls functions.

This page contains a selection of our wholesale conduct content, to help firms easily digest some of the complex challenges they are facing. You can click below to read our thought leadership, technical insights and regulatory round ups of the latest news and views.

Wholesale Conduct hot topics

The area of Market Conduct is a constant evolving area where firms are challenged with ensuring that they are able to both identify and manage conduct risks appropriately. We have outlined below some of the key areas that are particularly hot topics in the conduct space at the moment.

Conduct in a remote working environment
Conduct in a remote working environment

Whilst the fundamentals of market abuse have not changed, there have been changes to the ways that risks can manifest in remote working environments. Firms must adapt surveillance to meet regulatory expectations that office and home working arrangements to be considered as equivalent.

FCA Conduct focus
FCA Conduct focus

In a recent review, the FCA noted that banks’ overall ability to identify conduct risk remains weak and there is a lack of awareness of certain conduct topics including enabling client misbehavior, and new risks arising from automation and LIBOR.

Firms face costly fines for failure
Firms face costly fines for failure

Failing to demonstrate sufficient enterprise-wide risk management, compliance risk management, data governance, and internal controls have not only resulted in costly fines, but could also lead to shut-downs and comprehensive corrective actions to improve weaknesses.

Layering and Spoofing
Layering and Spoofing

Layering and spoofing have been at the centre of regulatory attention recently, with a notable spike in regulatory enforcement, that included significant monetary penalties.

Institutions must provide, and be able to prove, supervision to employees sufficient to enable the firm to identify, adequately investigate and stop misconduct.

FMSB Spotlight Reviews
FMSB Spotlight Reviews

The FICC Market Standards Board (FMSB) publishes Spotlight Reviews aimed at illuminating important emerging issues in FICC markets, including algorithmic trading and machine learning; data management, LIBOR transition, remote working, machine learning in surveillance and measuring execution quality. As the landscape continues to shift and expand, these reviews point to existing laws, guidelines and business principles and practices.

Get in touch

Connect with us

 

Want to do business with KPMG?

 

loading image Request for proposal

Our Insights

Related Articles