LONDON (Reuters) – Traders have to be clear about what data they’ll share with others within the market to keep away from new rigging scandals, a British trade physique stated on Friday.
The FICC Markets Standards Board (FMSB) proposed steering on what kind of “market colour”, or data, contributors can change in commodities and stuck revenue markets in Britain, one of many world’s greatest monetary centres.
“The question of what information may be shared between participants in these markets is complex and recent conduct events have drawn attention to the risks associated with sharing information in an inappropriate manner,” the board stated in an announcement.
The FMSB is an trade physique which counts all main global banks amongst its members, who are usually anticipated to observe its tips.
Banks have been fined billions of for making an attempt to rig forex markets and the Libor rate of interest benchmark.
The instances threw a highlight on market color, or conversations between brokers from totally different banks over the cellphone or by electronic mail, immediate messaging and morning calls.
The FMSB has proposed a “statement of good practice” for public session.
“The use of and sharing of information within markets is a complex area around which there is significant uncertainty,” FMSB Chair, Mark Yallop, stated.
“This means market participants often avoid sharing any information which can reduce market liquidity; however, sharing of some information is necessary for markets to operate and sharing market colour can in fact make markets operate more efficiently.”
Market contributors ought to clearly establish and appropriately restrict entry to confidential data, and provides examples of what can and can’t be included in “market colour” or views on the overall state of the market.
The goal is to cease merchants crossing the road between common remark and giving data that will make it straightforward to establish a consumer or present funding suggestions.
The FMSB was arrange following a advice from Britain’s government and markets regulators to assist clear up the forex markets after a foreign exchange rigging scandal.
The session ends in August, with ultimate tips on account of be revealed shortly afterwards.
Reporting by Huw Jones; Editing by Susan Fenton