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. this is set out in more detail in the femr progress report being published today at : https : / / www. bankofengland. co. uk / markets / fairand - effective - markets all speeches are available online at www. bankofengland. co. uk / speeches establishing readily understood standards for their markets. and the global fx committees have published the fx global code, the first globally consistent code of conduct for fx markets. but codes are of little use if nobody reads, follows or enforces them. this is where the uk ’ s senior managers regime ( smr ) comes in. senior managers regime the smr gives teeth to voluntary codes by incentivising firms to develop, adopt and embed them. it is very welcome that the fca is currently consulting on proposals to recognise industry codes publicly under the smr. by requiring identification of the most senior decision - makers, the smr re - establishes the link between seniority and accountability, strengthens individual accountability, and reinforces collective responsibility. as the smr starts to bed in, there are encouraging signs that it is making a difference. for firms, the smr is clarifying and improving governance, accountability and decision - making. for supervisors, the regime is helping identify weaknesses in governance and accountability, and it is helping them to encourage the necessary changes. adoption is spreading. some international firms are voluntarily adopting elements of the smr ’ s certification requirements to strengthen their global operations. a number of jurisdictions are applying the principles and features of the smr. and elements of the regime are included as examples in the fsb ’ s recently published toolkit on governance frameworks. while we cannot eliminate misconduct, these measures should reduce its scale and frequency, and they will broaden the sanctions for bad behaviour. all of this will help restore trust in financial markets so that they can work as effectively and efficiently as possible to serve the real economy. markets forum 2018 today marks an inflection point, when we can celebrate what has been achieved but then look ahead to future challenges. the spirit and intention behind femr is that continual focus is required because markets continually evolve. the

. uk / report / 2015 / fair - and - effective - markets - review - - - final - report all speeches are available online at www. bankofengland. co. uk / speeches we know that the city has a particular responsibility given london ’ s position as the pre - eminent global financial centre. what has been achieved? so what has been done to re - build the necessary market infrastructures for real markets to thrive? in the uk, laws and regulations have been strengthened by, for example, introducing a criminal regime for manipulating benchmarks. public authorities know they cannot and should not try to legislate for every circumstance, monitor every transaction, or anticipate every market innovation. as femr recognised, while fines and sanctions have roles in deterring misconduct, they will not, on their own, bring about the cultural change needed. we must move from an excessive reliance on punitive ex post fines of firms to greater emphasis on more compelling ex ante incentives for individuals, and ultimately a more solid grounding in improved firm culture. this starts with reducing opportunities for bad behaviour, for example, by overhauling the regulation of key benchmarks in ficc markets. it requires compensation rules that align risk and reward. in the uk, a significant proportion of variable compensation now must be deferred for a period of seven years. to address the ‘ rolling bad apples ’ problem, mechanisms are now in place here to ensure that when individuals move on their history will be known to those who consider hiring them. firms will be required to share information on breaches of individual conduct rules, their fitness and propriety assessments and outcomes around subsequent disciplinary proceedings. these measures are all very constructive but they are not yet sufficient. that ’ s why the bank of england supports initiatives that ensure firms and their employees take greater responsibility – individually and collectively – for their own conduct. uk authorities have used their convening powers to encourage market participants to establish standards of market practice that are well understood, widely followed and, crucially, that keep pace with market developments. industry has responded. the banking standards board is promoting higher standards of conduct and competence across the uk banking system. the global ficc market standards board ( fmsb ) is 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. and finance is one of the largest sectors of