Regulator to probe how firms can deal with benchmark manipulation
The Financial Conduct Authority (FCA) has announced plans to investigate how firms can reduce and deal with the risk of benchmark manipulation.
As part of its business plan, which was published today, the regulator says it’ll assess whether firms have “learnt lessons” from Libor and other recent controversies.
It'll also “ask if adequate controls on traders behaviour and activity are now in place to prevent future manipulation of benchmarks.”
Chief executive Martin Wheatley, who’s today speaking at the City UK Conference, said:
Following widespread attempted manipulation of LIBOR, firms should ensure that traders are not able to act in this way in the future. We are determined that firms need to take the matter of manipulation of any benchmark seriously and will be working with firms to seek out any issues that may remain.
Over the next year we will increase the intensity with which we supervise wholesale conduct to ensure that transactions undertaken by these firms do not have a harmful impact on market integrity.
The FCA has also set out its annual funding requirement for 2014/15 today, hiking it to £446.4m – up 3.3 per cent from the previous year’s £432.1m. The increase has been driven by the cost of a new competition team, the FCA’s said.
When it comes to fees charged to the industry, the regulator has confirmed that the minimum fee of £1,000 is staying unchanged for the fifth year in a row, with 42 per cent of firms paying only the minimum fee next year. Wheatley:
We have worked hard to ensure that the small firms we regulate pay the least and once again we are able to keep the minimum fee at the same level. The increases will be borne mainly by larger and more complex groups which pose the most risk and are costliest to regulate.
Today's announcements follow the FCA's "extraordinary blunder" on Friday, when it said it would be launching a full-scale investigation into 30m insurance policies.
The news saw shares in insurers plummet, but quickly became something of an embarrassment for the regulator, when it clarified that the probe would actually be nowhere near that widespread, not reviewing the policies individually.