On 26 June 2019, the Financial Conduct Authority (FCA) announced that it has recognised the voluntary FX Global and UK Money Markets Codes (the Codes) under its industry codes recognition scheme. Last year the FCA launched the scheme for recognising industry codes for unregulated financial markets and activities. The Codes are the first industry codes that have received recognition under the scheme.

FCA recognition of industry codes has practical implications for firms and individuals subject to the Senior Managers & Certification Regime. Under the regime, it is a requirement “to observe proper standards of market conduct” (COCON 2.1, Rule 5). These rules apply to all activities carried out by a person in the course of their employment, including unregulated activities. When considering whether an individual carrying out unregulated activities complies with the standards of the market, the FCA will consider whether the relevant market codes and exchange rules have been complied with.

Although industry codes are not mandatory, conduct that is in line with a recognised industry code will tend to indicate that a person subject to the Senior Managers & Certification Regime is meeting their obligation to “to observe proper standards of market conduct” when carrying out unregulated activities.

The Bank of England has acknowledged the FCA’s announcement by welcoming the recognition of the voluntary Codes. Andrew Hauser, Executive Director for Markets at the Bank of England noted that in light of the upcoming expansion in scope of the Senior Manager’s Regime in December 2019, recognition of the Codes by the FCA provides “another, wholly positive, reason for those who have not yet signed up to do so“.

The FCA’s recognition of the Codes has, under the FCA Conduct Rules in COCON, effectively given the Codes a pseudo-binding effect for industry participants. Whether acting in ways which do not clearly contradict the standards set in the Code will be considered to be acceptable conduct and therefore compliant with COCON 2.1, Rule 5 is a question yet to be answered.