In some cases, they may choose to adopt standards first articulated by our committees as part of their frameworks. 22 Conclusion Market participants have a responsibility to themselves, their clients, and the financial markets in which they transact to implement best practices within their own institutions and to encourage their clients and other counterparties to do the same. Broad adoption of best practices can strengthen each market participant’s existing controls, help reduce market disruptions, and ultimately foster greater confidence in the broader financial system. Raising standards of behavior begins with creating a culture in which people are motivated to follow good market practices. The primary responsibility for improving the culture in the financial services industry rests with you, your firms, and every other financial institution participating in global financial markets. Best practices can play a role in building a strong ethical culture that improves the behavior of market participants and strengthens the public’s trust in the industry. Central banks have an interest in ensuring that financial markets sustain a healthy and robust economy. As active market participants and for the transmission of monetary policy, we support best practices that promote the integrity and effectiveness of the financial markets. We recognize the usefulness of establishing a collaborative process for identifying and affirming standards of good market practice. We also recognize that the success of best practices relies on the contributions and undeniable support of market participants and primary dealers in particular.

However, no market participant wanted to be the first to begin charging margin out of  10  Several examples in the FX and fixed income markets illustrate that best practices would not be successful without the undeniable support of market participants. For instance, reduction is settlement risk due to the adoption of payment-versus-payment mechanisms, drop in settlement fails in U.S. Treasury markets after the implementation of the fails charge, and improvements in the derivatives markets infrastructure are just a few examples. 11  The BIS effort to develop an FX Global Code and the Bank of England’s leadership of the Fair and Effective Markets Review are two examples of this public-private partnership. 12  Automated trading has also been the focus of significant regulatory attention in the United States and elsewhere over the last several years. See, for example, the Commodities Futures Trading Commission’s proposed rules on “Regulation Automated Trading,” the recent Financial Industry Regulatory Authority (FINRA) amendment to the National Association of Securities Dealers Rule 1032, and the proposed amendments to the U.S. Securities and Exchange Commission’s Rule 15b9-1. 4  BIS central bankers’ speeches  fear that their counterparties would stop trading with them and move their business to a counterparty that did not require margin. The TMPG addressed this problem with a recommended practice that all market participants exchange two-way variation margin on a regular basis. 13, 14 Best practices can also encourage market participants to question long-established trading practices and advocate for change.