Wholesale Market Conduct

In June 2023, the Central Bank published a thematic assessment examining the approach taken by firms’ Boards and their senior management to foster and embed an effective conduct-focused culture in Wholesale Market Firms. This follows the Central Bank’s increased focus on conduct risk and culture in recent years, with the 2019 Wholesale Market Conduct Risk Industry publication and the 2023 Securities Markets Risk Outlook Report outlining the importance of fully embedded effective wholesale market conduct risk frameworks.

The Central Bank’s thematic assessment evaluated firms’ market conduct risk management frameworks to support and enable firms’ Boards and senior management to deliver an effective conduct-focused culture, studying a cross sector cohort of firms engaged in Markets in Financial Instruments Directive (MiFID) activities.

Read our report below where the Risk & Regulatory Consulting team have summarised the key themes from this report and how KPMG can assist you when considering the effectiveness of your organisation's Wholesale Conduct risk and culture. 

The Central Bank identified a number of areas firms must work on to ensure that the desired culture is effectively embedded into their day-to-day operations, supporting governance arrangements and control frameworks. The key findings are set out below:

1. Board and senior management discussion and challenge of conduct risk and culture requires improvement. This is compounded by often deficient Management Information (MI) and reporting, inhibiting the ability of the Board to manage market conduct risk and promote an effective conduct-focused culture. 
2. Responsibilities for managing and mitigating market conduct risk are not reliably conveyed in the role profiles and objectives for senior management, inhibiting accountability. 
3. The onset of hybrid working has required the review of governance and control frameworks to ensure these are sufficiently robust to manage emerging conduct risks. 
4. Boards and senior management should consider how they can enable an inclusive “speak-up” culture that fosters and promotes an environment where staff can raise concerns.