The Financial Markets Standards Board (FMSB) has shared its final Statement of Good Practice for use by the industry to specifically support the application of model risk management frameworks to execution algos. The global industry-developed good practice supplements existing broader supervisory guidance and focuses on areas where market practitioners, including ‘first line’ risk owners and ‘second line’ risk managers, have identified that the nature of model use in algos merits a differentiated approach compared with other model types.
Ciara Quinlan, Global Head of Principal Electronic Trading, FX, Rates and Credit at UBS Investment Bank, who headed up the FMSB Working Group, welcomes the publication of the final Statement of Good Practice. She adds: “Harnessing expertise across the industry via FMSB to create guidance of this sort is immensely valuable and I hope what we have set out today will help to support all those across the industry working in this space, as well as ultimately improving market effectiveness and confidence.”
