On September 30, 2014, the Financial Stability Board (“FSB”) published its final report on FX benchmarks. The report is the work of an FSB working group set up to focus on FX benchmarks due to the concerns raised about the integrity of FX benchmarks and the incentives for potential misconduct linked to the structure of trading around the benchmark fixings. The report covers: (i) an analysis of the FX market structure; (ii) incentives for market misconduct; (iii) remedies to address any adverse incentives; and (iv) recommendations for improving the construction of benchmarks. The report includes 15 specific recommendations for improving market structure and conduct which the working group considers can be implemented by industry participants. However, the report notes that national authorities may determine that regulatory change is necessary to ensure that the improvements take effect and as a result of investigations into alleged misconduct in the benchmark markets. The report also supports the recommendations of the International Organization of Securities Commissions for the WM/Reuters 4 p.m. Closing Spot Rate by The World Markets Company PLC.

The report is available at:

http://www.financialstabilityboard.org/publications/r_140930.pdf.