Update

UK Business Conduct Regulation

	Have you read...?

The latest edition of the FSA's Handbook Development newsletter (No 95), indicates, inter alia , that the following consultation papers, discussion papers and feedback statements, which are likely to be of interest to FOA members, are due to be published over the coming months:

	Best Execution Guidance

The FOA, working with the Association of Foreign Banks (AFB) have produced the Best Execution Guidelines on the website at the end of last year. These are now in final form, but remain open to amendment and they will, of course, be kept up-to-date.

	FOA Market Misconduct Monitoring Guidance Project

As you may be aware, the FOA has instructed Jonathan Marsh, from Berwin Leighton Paisner LLP, to develop FOA Guidance on monitoring transactions for market abuse purposes. A dedicated Practitioner Advisory Group has now been established to provide industry input into the project, which will report to the relevant FOA Committees/Working Groups (either through the FOA Executive or volunteer members). Additional members are, however, sought from firms active in financial derivatives / spread betting & CFDs.

Following the first meetings of the Practitioner Advisory Group, it was agreed, amongst other things, that:

•  The scope of the guidance will be extended beyond market abuse to include other forms of market misconduct, including a discussion of the interaction between the market abuse Suspicious Transaction Reporting regime (STR) and the Proceeds of Crime Act 2002/Terrorism Act 2000 Suspicious Activity Reporting (SAR) regime. The title will now be Market Misconduct Monitoring Guidance.

•  The Guidance will discuss systems and controls (including staff training and awareness) generally, rather than focus unduly on the monitoring of market misconduct.

•  Given the move to a more risk-based approach to regulation and their level of granularity, this Guidance will not include monitoring of individual exchange rules.

•  The Guidance – in particular the general Section 1 – will cover all market sectors within the scope of the FOA and its membership, although it is recognised that the Market Specific Guidance in Section 2 is likely to be far more detailed for some markets (e.g. commodities) than others. References to OTC derivatives will be included where this is considered appropriate by the members (e.g. OTC and physical commodities are likely to be included).

•  The Market Specific, Section 2, Guidance will be developed with input from either separate drafting groups (led by Practitioner Advisory Group members) or (where members consider it more appropriate) pre-existing, market facing, FOA Working Groups/Committees. The FOA Executive will provide assistance as and when required, including seeking to ensure that all market sectors are represented appropriately.

An early draft of the Section 1 General Guidance has been circulated to and reviewed by the Advisory Group and work is commencing on drafting the Market Specific, Section 2, Guidance. Should you or a colleague wish to participate in one (or more) of the drafting groups – currently, equity and debt derivatives, spread betting and commodities (to be sub-divided into metals, energy and softs) – please contact Jane Green

	Look out for …

* As explained in Handbook Development newsletter No 47, 3 star CPs are “high-profile consultations, and major policy changes affecting a large number of consumers or financial sectors,” 2 star CPs contain “other important policy changes” and 1 star CPs contain “minor changes.”