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Standard-setter tackles post-Libor pricing method

A UK capital markets body that includes BlackRock and Goldman Sachs among its members has proposed higher standards for fixed income and currency traders in light of Libor rigging and other scandals.

The FICC Markets Standards Board (FMSB) – which is tasked with rebuilding confidence in wholesale fixed income, currency and commodities markets – has this week published best practice proposals.

A proposed standard, known as the ‘Reference price transactions standard for fixed income markets’, concerns the complex issue of reference price transactions (RPT), a common way of dealing in fixed income markets.

Use of RPT by asset managers in portfolio valuations and performance measurement is widespread, according to the standard’s text, which is available here.

The standard offers clear guidance on practices that should be avoided, the FMSB said. A key aim of the guidance is to ensure pricing is more transparent.

The FMSB – which was created in 2015 following the Fair and Effective Markets Review conducted by HM Treasury, the Bank of England and the Financial Conduct Authority – has requested industry responses to its proposals.

Among others of the FMSB 36 member firms are State Street, JP Morgan, Deutsche Bank and Legal & General.

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