This is formalised in the example of the FX Global Code, where major central banks including the Bank of England, have confirmed that they intend to adhere to the principles of the Code, and that they also expect the same of their 9  regular FX counterparties. Similarly, the Bank of England will adhere to the UK Money Markets Code and Precious Metals Code and will expect the same of its market counterparties. Fourth, the combination of new arrangements for compensation, the expectations of the Senior Managers Regime (SMR), regulation and market standards are mutually reinforcing. In the UK, a significant proportion of the variable compensation of key decision-makers must now be deferred for a period of seven years to ensure it can be clawed back over the time scales it generally takes for conduct issues to come to light. The SMR gives teeth to voluntary codes by incentivising firms to develop, adopt and embed them. By requiring identification of the most senior decision-makers of banks, insurers and major investment firms, and setting requirements on them, the SMR re-establishes the link between seniority and accountability, strengthens individual accountability, and reinforces collective responsibility. Senior Managers can now be held individually accountable if they fail to take reasonable steps (including training or proper oversight) to prevent or stop regulatory breaches in their areas of responsibility. The SMR prescribes individual responsibilities – typically to the Chair and CEO respectively – for developing and embedding a firm’s culture, alongside a collective responsibility for the Board.

Its key objective will be to pursue a broad-based transition from Libor to SONIA by 2021. Buy side firms, issuers, infrastructure firms and trade associations will be brought into the Group alongside banks and broker-dealers. We are under no illusions about the complexity of the task. Libor is embedded throughout the financial system in derivatives, loans, bonds and commercial contracts. 13  The Bank and FCA are committed to supporting UK market participants as they prepare for the transition. Reasserting London’s Leadership of Real Markets  To conclude, two years on from FEMR, by working together, we are making enormous progress. We are moving from markets that collapse when there is a shock from abroad to markets that are resilient. From markets where transactions occur in chat rooms to markets that are professional and open. From markets where few were accountable for anything to markets where everyone is responsible for their actions. The FMSB is playing an essential role in this transformation. When your standards are combined with more robust regulatory requirements, new compensation arrangements and the Senior Managers Regime, we are achieving what Canute could not. The tide of misconduct is going out, revealing the real markets working for the good of the people of the United Kingdom and the world. 12  To facilitate a smooth transition, the FCA has coordinated panel banks to support Libor until the end of 2021. See the Record of the September FPC meeting at http://www.bankofengland.co.uk/publications/Pages/Records/fpc/2017/record1710.aspx 13  9  All speeches are available online at www.bankofengland.co.uk/speeches  9