The breadth and scale of financial market misconduct in recent years has resulted in shocking headlines, severe penalties and a spate of soul-searching. Some of the worst instances have occurred in the fixed income, currency and commodity (Ficc) markets, which lie at the heart of the economic and financial system.
These markets affect all of us. They determine the borrowing costs of households, companies and governments, help to set countries’ exchange rates, and influence the cost of food and raw materials. And they are vast: turnover in foreign exchange markets is £3tn a day; the global stock of corporate and government debt is £30tn; and the notional value of outstanding Ficc derivatives contracts is in excess of £400tn. Though global in scope, a large share of these markets lie in London. So it is essential to all of us that they work well.
Yet all is not well. The abuses of recent years have seriously eroded public trust in the Ficc markets, and have left a legacy of doubt and uncertainty that is weighing on their ability to carry out their vital functions. We must put that right – and that is the objective of the Fair and Effective Markets Review.