The CFA Society of the UK (CFA UK) has responded to the Fair and Efficient Markets Review (FEMR” report on behalf of its 11,000 members.
The CFA UK welcomes the acknowledgement that high standards of professionalism need to be applied across wholesale financial markets. The Society is also encouraged that the FEMR team has recognised that a key component of restoring trust is a requirement that market participants are appropriately trained and qualified and maintain their competence through continuous professional development (“CPD”)
A large number of those that work in the investment sector are members of a professional body and are conscious of their duty to maintain appropriate standards. The same should be true of finance more generally and banking in particular.
The FEMR report identifies the ‘ethical drift’ that has taken place in FICC markets. It seeks to raise standards, professionalism and the accountability of those working in the market. The report speaks of the need for relevant, rigorous and case study-based qualifications. Those are characteristics of the CFA Program and we are pleased that they are valued by the FEMR team.
It has been argued in the past, that professional and ethical standards should not apply in wholesale markets – such as the money markets – because all participants can operate on a ‘buyer beware’ basis. However, that assumption failed to take account of participants’ responsibility to maintain a fair market so as to promote trust and, ultimately, to provide a public benefit in effective price formation. That view also failed to take account of the link between wholesale markets – such as the interbank rate or FX markets –and their use by retail consumers.
It is encouraging that the FEMR team has recognised that a key component of restoring trust is a requirement that market participants have the requisite skills and knowledge to fulfil their roles effectively and responsibly – and that they should maintain their professional competence.
Says Nitin Mehta, CFA, Managing Director of CFA Institute in the EMEA region, says: “Finance professionals owe a duty of care to their clients and to the market. We would not expect doctors and other medical professionals to be able to practice without having first received proper training in the technical and ethical practices required. We should require the same standards in finance and ensure that those working in finance are qualified to act professionally.”
Adds Will Goodhart, chief executive of the CFA Society of the UK, says: “The framework and standards for qualifications will be set by the new FICC market standards board and we look forward to working with the Board on its guidance on training, qualifications and CPD. It’s welcome that the regulator will be taking account of the degree to which firms provide participants with appropriate training through the senior manager and certification regimes – and that the regime is being extended to cover all FICC market participants. Much will depend on the enthusiasm for qualifications and training among those responsible for organisations’ culture, but it helps that the need for FICC market participants to act professionally has regulatory teeth.”
