turning back the tide speech given by mark carney, governor of the bank of england ficc market standard board “ two years on from the fair and effective markets review ” bloomberg, london 29 november 2017 i am grateful to terry allen, alice carr, orlando fernandez ruiz, edward ocampo, analise mercieca, sasha mills, louse oscarius, chris salmon and tim taylor for their assistance in preparing these remarks. all speeches are available online at www. bankofengland. co. uk / speeches it is a pleasure to join the ficc market standards board ( fmsb ) in reflecting on what ’ s happened in the two years since the fair and effective markets review ( femr ). this afternoon i would like to assess recent progress in building real markets for the good of the people and discuss the forward agenda for your important work. two and a half years ago, femr set out a series of ambitious recommendations to restore confidence in fixed income, currency and commodities ( ficc ) markets. the fmsb ’ s work is an integral part of the femr solution. your work matters because uk markets are essential for global commerce. the city has a special responsibility to address the root causes of misconduct given its pre - eminent position in global markets. the uk accounts for 40 % of both global fx volumes and trades in otc interest rate derivatives, and two - thirds of trading in international bonds. more international banking activity is booked in london than anywhere else. your work matters because the financial sector is an important contributor to uk prosperity. finance is one of the largest sectors of the uk economy. around 400, 000 people are employed in financial services in london alone, 1. 1 million across the country as whole. their enterprise contributes £115 billion to our national income, £80 billion to our exports and £70 billion to the exchequer, equivalent to two - thirds of the nhs budget. your work matters because finance is not an end in itself ; financial markets serve the real economy. by financing firms that hire, invest and expand, markets drive growth. by opening up cross border trade and investment, they create new opportunities for businesses and savers. by transferring risks to those most willing and able to bear them, markets help households and businesses insure against the unexpected. see fair and effective markets review final report, hm treasury, bank of england and fca ( june 2015 ). at : http : / / www. bankofengland. co.

management transactions for new bond issues is nearly final, and an earlier draft standard on fx stop - loss orders has been absorbed into the fx global code. in each case, potential conflicts of interest are mapped to high - level principles designed to mitigate them. for reference price transactions, emphasis is placed on transparency with clients on mechanics and potential conflicts, and on mitigating the risk that the wider transactions of dealers could be market moving. the draft standard on risk management for new bond issuances sets out principles to mitigate risks around selection and formation of reference rates. the fmsb ’ s statements of good practice, such as for surveillance of fx markets, provide more detailed guidance and worked examples to help set expectations. the fmsb is also scanning the horizon for future misconduct risks, including through its innovative behavioural cluster analysis. rightly, given rapid changes in underlying market structure, this process has prioritised work on vulnerabilities arising from fast automated markets. will these standards and codes make a difference? we know from history that codes are of little use if nobody reads, follows or enforces them. why should the fmsb ’ s efforts be expected to help reverse the tide of ethical drift? indeed, given the long history of misconduct, aren ’ t such efforts akin to king canute rebuking the waves? i ’ m more optimistic that the tide will turn because the fmsb is part of a much broader effort by uk authorities and market participants. together, we have created a comprehensive and mutually reinforcing set of measures that strengthen the hard and soft market infrastructure. the resulting incentives give fmsb standards moral force and practical consequence. first, in the fmsb ’ s core work, the best in the market are taking responsibility for identifying and codifying best practice, in a way that complements and reinforces existing regulation. the fmsb now convenes senior participants from fifty global issuers, underwriters, asset managers, exchanges, custodians and investment banks. the breadth and engagement of the membership gives its standards credibility and creates peer pressure within the industry to promote adherence. canute, king of denmark, england and norway, 995 - 1035, reputedly set his throne by the sea shore and commanded the incoming tide to halt and not wet his feet and robes. yet " continuing to rise as usual [ the tide ] dashed over his feet and legs without respect to his royal person. then the king leapt backwards, saying : '