Individual Conduct Rule 5 (“You must observe proper standards of market conduct”)
At its heart, individual conduct rule 5 (“You must observe proper standards of market conduct”) is another requirement to ‘do the right thing’.
For these purposes, the term “market” is construed very widely. It is NOT restricted to ‘regulated markets’ or markets solely for professional investors – including consumer markets (whether for products, services, credit or otherwise).[1]
Compliance with the codes and rules of the market or exchange in question will TEND to show compliance within individual conduct rule 5.[2] This provision is interesting as much for what it does not say – suggesting (by omission) that compliance with the rules of the market in question will not ABSOLUTELY GUARANTEE compliance with the requirement to “observe proper standards of market conduct”.
Examples of the types of conduct that might constitute a breach of individual conduct rule 5 include manipulating or attempting to manipulate a benchmark or a market, such as a foreign exchange market, or a benchmark.[3]
The use of the word “manipulating” is suggestive of a requirement for deliberate conduct. However, the basic requirement within individual conduct rule 5 is drafted in terms which would also include negligence.
Next time we will turn to look at individual conduct rule 6 (“You must act to deliver good outcomes for retail customers”).
Stay tuned!
[1] COCON 4.1.17G
[2] COCON 4.1.15G
[3] COCON 4.1.16G
