An industry body published a standard on Friday that defines acceptable practice in financial and commodity markets, aiming to stamp out behaviour that prompted regulators to fine Barclays for fixing the price of gold. The Fixed Income, Currency and Commodities Markets Standards Board was set up last year by market practitioners to improve conduct in wholesale markets by tackling grey areas in practice.
The board published a new standard in draft form for public consultation to cover so-called binary options in commodities markets.
The options pay out a fixed amount or nothing, depending on whether the underlying price of a commodity hits a pre-agreed level at a specific point in time.
This created a conflict of interest between the bank selling the option and the customer.
The board was prompted by a 26 million pound ($34 million) fine for Barclays in May 2014 after a trader manipulated the setting of gold prices to avoid payment to a customer on an option.
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