Speaking at the Profit and Loss conference in Copenhagen last week on a panel that focused on the new Global Code that is in draft, it was apparent that their is still a wide range of engagement from the financial community.
Bear in mind that in the mind of the regulators this Code is designed to apply to ALL participants in the wholesale market - not only banks. The feeling in the room that questions and discussion suggested highlighted some key elements:
- Non-banks are not yet engaged in this discussion, so work remains on the table here
- Whilst some banks have engaged in a gap analysis comparing where they would like to be with how teams operate currently, many have not yet achieved this understanding
- The thorny issue of acting as agent or principal is generating significant conversation and even some confusion in the industry
- Last Look is developing all the time as a conversation around what is acceptable and what is not. This has not gone away!
There is the strongest sense that most participants would like a simple set of rules and wish to behave in the correct manner. The challenges arise in those areas of the industry where by their very nature, things are less than clear cut and discretion and/or decisions are required on an ad hoc basis. Legislating those areas (e.g. last look, agency vs principal and stop loss orders) out of existence would profoundly change the nature of how customers are able to transact and manage risk. Change is rarely comfortable!