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The Bank of England is calling on all participants in the UK’s money markets, from banks to local authorities and hedge funds, to sign up to a code of conduct intended to clean up the City of London’s reputation following a series of benchmark-rigging scandals.
As part of the code that was published on Wednesday, all participants in the money markets, whether they are regulated financial firms or not, sign up to six core principles around ethics, governance, information-sharing and confidentiality, and trade execution. The principles include being expected to behave in an “ethical and professional manner to promote the fairness and integrity of the UK markets.”
The code is voluntary and has no legal fall-back but regulated financial firms are expected to make sure senior managers oversee its implementation, or risk falling foul of a tough accountability regime that has also been introduced recently in effort to improve standards in the City in the wake of the Libor and foreign-exchange manipulation scandals.
A global code for forex was published last year, which the BoE has used as a template for its own code that covers the UK’s deposit, repo and securities lending markets.
Chris Salmon, the BoE’s executive director for markets and chair of the Money Markets Committee, said:
The UK Money Markets Code sets out a clear, principles-based framework for how all participants are expected to promote the integrity of the deposit, repo and securities lending markets. It has been written by the market, for the market. Participants should therefore embrace the new Code and embed the high standards of behaviour it sets out.
The move by the BoE comes as the central bank is trying to distance itself from scandals, including Libor and forex, which have recently come back to haunt it. The code will apply to the BoE itself, although it added that sometimes it “may need to operate outside of the full expectations of the Code in order to appropriately undertake its responsibilities and activities.”
Mr Salmon is the uncle of Tom Hayes, who was the first person in the world to be convicted by a jury of Libor-rigging offences. There is no suggestion of wrongdoing against Mr Salmon. Hayes is now alleging a miscarriage of justice and has taken his case to the Criminal Cases Review Commission.