Time running out for markets to rebuild trust - industry panel

By Patrick Graham and Jamie McGeever EDINBURGH (Reuters) - Time is running out for the financial sector to show it can police itself adequately, root out market abusers and ultimately prevent recent market-rigging scandals from being repeated, an industry body said on Friday. Elizabeth Corley, chair of the cross-industry Market Practitioner Panel, said this should be done through harmonising stricter internal codes of conduct and giving banks the powers to sanction individuals, rather than through tighter regulation. "The top management and boards absolutely recognise that this is the time for the industry to put things right. Banks know they have to get this right or else there will be very serious consequences," Corley told Reuters. The MPP on Friday published its recommendations to the Fair and Effective Markets Review established by British finance minister George Osborne (http://goo.gl/PQl8bC). The FEMR will report its review of fixed income, commodities and currency trading (FICC) markets in June. The review was launched last year by regulators and the British government, worried revelations about the rigging of interest rate and currency market benchmarks would undermine London's role as a financial centre. In its recommendations the MPP, which represents a wide range of market participants such as banks, funds and asset managers, said FICC markets are not "fundamentally or irretrievably" broken or in need of "significant" reform. Corley, who is also global chief executive officer at Allianz Global Investors, said the recent market-rigging scandals and other cases of market abuse are problems of individual conduct, not collective industry culture. "The two feed off each other. It's either a viscous or a virtuous circle. You can have the best ethics and values at board level and senior management level ... but not always at the trading desk level where separate subcultures can exist," Corley said. "Line managers are the first line of defence, and responsible for employee conduct. Compliance and risk is the second line of defence," she said. Firms should do more due diligence on individuals before they hire them and embed codes of conduct and ethics into employment contracts, Corley said. The MPP also said on Friday that the Financial Conduct Authority's Approved Persons Register, which now includes many but not all bank and fund traders, should be developed to allow more swapping of information between companies about past or future employees. It said that the register must have "teeth" but also respect individual rights, adding that the panel was split on the case for exam-based professional qualifications. (Reporting by Patrick Graham and Jamie McGeever; Editing by Tom Heneghan)