The Financial Conduct Authority (FCA), the UK’s paramount regulatory authority, has published the final iteration of its rules mandate, thereby confirming its approach to strengthening individual accountability across algorithmic and high-frequency trading (HFT), according to an FCA statement.
More specifically, the FCA’s latest regulatory mandate will see the extension of its rules to algo and HFT traders across banks, building societies, and Prudential Regulation Authority (PRA) designated investment firms.
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The decision to help shore up accountability for traders and individuals across the banking sector represents the latest effort by the regulator to help many global regulators that have taken concerted efforts to fortify their respective compliance measures in this realm across several jurisdictions. In terms of the FCA, these latest rules follow earlier efforts from the PRA to help bolster individual accountability in the banking sector.
Firms will have until September 7, 2016 to implement a series of new rules, namely the extension of two new functions- client dealing and algorithmic trading. The rules themselves will also come into effect in less than a month- on March 7, 2016- and apply to senior managers and certification regimes at the same time.
In addition, the newly unveiled rules will also include a broad-based tranche of accountability reforms such as proposals for regulatory references for candidates applying for senior management positions, as well as significant harm functions under the certification regime in banks, building societies, credit unions, PRA-designated investment firms and insurers.
According to Tracey McDermott, the acting Chief Executive at the FCA in a recent statement on the rules: “Today we made rules that will extend the certification regime to more fully capture people carrying out certain wholesale activities. We are determined to embed a culture of personal responsibility within the banking sector. Clear individual accountability should focus minds, drive up standards, and make firms easier to run and to supervise. And if things go wrong, it will allow senior managers to be held to account for misconduct that falls within their area of responsibility.”