Marshall Bailey CFA , President, ACI – The Financial Markets Association
Marshall Bailey CFA , President, ACI – The Financial Markets Association

The road away from perdition, and the end of “Constructive Ambiguity”

As I travel to meet senior bankers and regulators around the world, the conversation often turns personal. Yes, the agenda can be to discuss how to fix the industry, and providing industry-wide, global solutions to the FICC conduct challenges. The pros and cons of “hard legislation” in response to recent misdemeanours that have occurred is often discussed, but so is an acknowledgement that, despite the best efforts of regulators, the discrepancies and lack of harmonisation in rules is leading to unintended consequences and unclear expectations regarding behaviour and ethics. Thankfully, the industry is coalescing around a few central frameworks.

But when the conversation turns personal it is often about the sadness at the way their industry has been tarnished by some of the recent scandals that have been uncovered. Certainly, nobody feels at all sorry for those that are guilty of breaking the rules via fraudulent activity, manipulation or collusion in any form – those activities have always been unacceptable and they are right to face the consequences for their actions. But what is being done to help the rest of the 99.9% of hard-working, well-meaning professionals who want to provide an expert service to their clients? 

How do we help avoid perdition, which comes from the Latin perditio, and defined as a state of final spiritual ruin; damnation, and utter destruction or ruin? Are we doing enough to assist our staff, our clients and our industry to know the right behaviours? 


Interestingly, while it is true that the market is functioning better now, we are seeing the UK take the lead on reform. Much more work has been done here than in many other places by taking a careful and in-depth look into market practices. Bank of England Governor Mark Carney, along with colleagues at the Financial Conduct Authority and Her Majesty’s Treasury, have tasked the Fair and Effective Markets Review (FEMR) with coming up with practical solutions to the key issues affecting the FICC markets. Deputy Governor Minouche Shafik in particular has earned widespread praise for leading a thorough consultation process that is open and well constructed.

So what is the outcome so far? Ms. Elizabeth Corley, who leads the Market Practitioners’ Panel (MPP) at FEMR, has recommended that traders be required to make an annual attestation that they have complied with their codes of conduct — preferably one that is included in their employment contract. She says the approved persons register, which is in the process of being replaced by regulators, should be maintained and improved as a vehicle for the industry to share notes on “bad apples”. 

Ms. Corley has also called for the establishment of an industry-financed body to develop common codes and standards that “could also be promoted globally”. Likewise, the British Bankers Association (BBA) shares a similar view, stating: “Everyone undertaking activity in wholesale fixed income, currency and commodity markets should be required to pass exams and become professionally qualified.”

Yes, most banks already require their staff to undergo internal testing but we need to ensure this testing process is uniform and that there is a uniform, recognised standard that can be applied to all asset classes. As the BBA have said, “This would not need to be one single qualification for all markets but policy makers should work with the industry to identify which qualifications should be recognised as giving a ‘licence to trade’.”. The Chartered Institute of Securities and Investment and a number of other institutions also want something similar in place. 

But where do we go and whom should we approach to deliver this?

The ACI Financial Markets Association would be a good place to start. We have developed an online, e-learning and annual certification (or ELAC) portal, which provides employers and individual market practitioners in the financial sector with a high-quality accredited continuous professional development solution. This will help the industry reclaim professional standards in ethical conduct in a sustainable manner.

With the support of the ACI FMA member’s network (of which there are 13,000 and counting), and engagement with the industry, we offer a solution that empowers employers to provide and demonstrate the concrete steps they are taking to ensure all of their staff are continuously educated to the highest ethical standards of conduct. It also provides assurance that staff are aware of the latest best practice, and that they understand their individual obligations to their colleagues, customers and employers.


Well, if you think education isn’t required in today’s market, you couldn’t be more wrong. The ELAC portal provides visibility to your clients, staff, Board, regulators and shareholders that you are embedding internationally recognised behavioural standards. It aligns your staff as members of ACI FMA – an international network of financial markets professionals – and embeds a code of conduct recognised and endorsed by a growing number of regulators and central banks around the world. 

Perhaps most importantly, it is, measurable, achievable and timely, and increases staff awareness of the ethical conduct expected of them. And if you’re a hard numbers person, it mitigates operational risk under Basel III, saving material capital allocations under Pillar II. As Deputy Governor Shaifk has said, we need an end to “constructive ambiguity”. What the BoE does, the FSB may well endorse. In short, if you really want to help your clients, your employer, your staff and yourself to introduce reform for the better, get involved. 

Join the ACI FMA, educate your staff, enforce the Model Code, contribute towards the solution and become part of a global community abiding by the same set of ethical rules.