Market misconduct has been a recurring theme in financial markets for centuries. The last decade has seen an unprecedented global focus on improving the fairness and effectiveness of wholesale markets, and the consequent impacts on financial services firms have been vast. Public trust in wholesale markets was shaken; banks have been issued with significant fines and settlements in the last 10 years; legislation has been introduced in many countries to enforce individual accountability; and the ongoing cost of control and remediation is placing significant overhead pressures on efficiency and profitability.
With the everchanging landscape we are now seeing new challenges arising from the deployment of AI, digital assets and development of ESG products, as well as regulatory expectations being extended to non-banking firms such as CFD platforms and brokers. While the challenges of managing wholesale conduct are significant, firms are continuing to develop ways to more effectively mitigate the risk and to embed sustainable change in front office, oversight functions, surveillance and key support teams.
KPMG is at the forefront of this effort, working with the largest financial services firms and industry bodies to define and implement governance, risk and control frameworks. There is also an impact in the UK of Consumer Duty regulation for which wholesale firms need to understand the impact on not only their products but the distribution and clients. We have an in depth understanding of the regulations, industry standards and emerging good practice. This has enabled us to support a wide array of financial services firms by delivering advisory, assurance and change management services.
To meet regulatory expectations on conduct and culture, we have developed a range of technology solutions to support digitalisation and automation of control processes. These can be adapted to a range of use cases across front office and controls functions and help drive efficiency whilst maintaining conduct outcomes. This page contains a selection of our wholesale conduct content, to help firms easily digest some of the complex challenges they are facing. You can click below to read our thought leadership, technical insights and regulatory round ups of the latest news and views.
Algorithmic Trading Controls
As this year marks the fifth self-assessment and validation review for firms engaged in algorithmic trading activities, we have taken stock of lessons learned, discussing best practices and challenges faced by firms, and how to improve this overall process.
Front Office Supervision
There has been a formidable growth in the role of front office supervision in response to increased regulatory expectations and the operational and conduct risk events of the recent past. In this article we explore the drivers of change, leading and lagging practice, and how firms are balancing effectiveness and efficiency.
Market Abuse
The risk of market abuse through market manipulation and insider trading often results in significant gains at the cost of market participants. With an evolving landscape, including access to data and advancements to technology, firms are increasingly expected to enhance their surveillance frameworks to detect and monitor for market abuse more efficiently and effectively.
