The FICC Markets Standards Board (FMSB) released a statement on Good Practice on Algorithmic Trading in FICC Markets as a transparency draft for market consultation.
As the use of computer algorithms in FICC markets continues to increase, the potential for such trading activities to adversely impact market or firm stability, or result in harm to clients, also rises. Accordingly, algorithmic trading has increasingly been the subject of regulatory scrutiny and intervention.
This Statement of Good Practice draws on the extensive work conducted by regulators to date and seeks to further enhance the integrity and effective functioning of FICC markets by promoting good conduct and governance practices for participants engaged in algorithmic trading across all FICC asset classes and markets, in particular those subject to less stringent regulatory requirements.
It sets out 10 Good Practice Statements which cover the governance of, and management of conduct risks associated with, the use of algorithmic trading. HSBC’s Ciara Quinlan and Chris Dickens co-chairs of the FMSB Working Group.
Ciara Quinlan, global head of Principal Electronic Trading, FX, Rates and Credit at UBS, said in a statement: “The use of algorithmic trading systems across FICC markets has increased significantly in recent years and having robust governance structures in place to help manage the risks associated with this rise in algorithmic trading is critical. This Statement of Good Practice builds on the substantial work conducted by regulators in this space and should help further drive good governance practices particularly in less regulated asset classes and markets”.
Chris Dickens, COO for EMEA, Global Markets at HSBC said in a statement: “This Statement of Good Practice seeks to promote good conduct and governance practices applicable to algorithmic trading activities and demonstrates the shared commitment of market participants to enhancing the integrity and functioning of FICC markets.”