First launched in April 2017, the UK Money Markets Code (MMC), written and owned by the market and endorsed by the Bank of England (BoE), continues to be central for promoting the integrity, fair and effective functioning of the deposit, repo and securities lending markets in the UK. It provides UK market participants with a clear framework of principles and best practices which serve to promote a high standard of conduct and trust, when transacting across these markets.听Whilst the code remains voluntary, since launch it has established itself widely across the market, with over 220 institutions signed up currently, and as the industry continues to evolve, the code has been revised to reflect updated best practice.听
As part of this revision announced on 21 April 2021, the UK money markets, including repo and securities lending, are now presented with a new highlight that recognises the promotion of diversity and inclusion (D&I) as a best practice and acknowledges the benefits of a diverse and inclusive workforce.听Key to achieving this, the code highlights the role of flexible/remote working as an enabler, and importantly, in doing so, the BoE sets its expectation on consistent standards of inclusion wherever staff are located, whether in office or at home.
The significance of inclusion as it relates to flexible working?
The acknowledgement of D&I as a best practice is something many are now familiar with and it is indeed a welcome addition to the 2021 Code and compliments the BoE鈥檚 ongoing initiative to increase the diversity of the membership of its committees.听听
Nina Moylett, chair of the BoE securities lending committee (SLC), comments: 鈥淚 am delighted with the progress that has been made in improving the diversity and gender balance of the committee make-up. This is fundamental in ensuring the views and experiences of a diverse range of market participants are heard and can shape and inform the evolution of the industry as a whole.鈥�
In parallel with the BoE鈥檚 focus on this topic, we are also seeing greater emphasis from the UK Financial Conduct Authority (FCA), who as recently as March this year, indicated D&I as an area where we can expect greater scrutiny and where necessary, potential future use of enforcement powers to hold firms to account. Notably, the FCA have again recognised the updated code as an industry standard.
Equally, flexible working is recognised as valuable in enabling access to a wider range of roles by a broader talent pool of candidates from diverse backgrounds, bringing greater diversity of skills and lived experiences to the industry. During the past 12 months, the industry has proven that remote working can be achieved successfully and as the code states, it is now commonplace.
Therefore, as hybrid working models begin to rise to the surface in the post-pandemic world, there is an increased need for firms to remain intentional around inclusion. This includes staying alert to unconscious bias, specifically the risk of proximity bias, which exists today, but could become exacerbated in the future environment, if we don鈥檛 safeguard against it.听
Essentially, the code highlights to the market the need to remain mindful of the interrelationship between inclusion and flexible working, in order to drive hybrid working as a successful lever for D&I.
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What is proximity bias and why is it important to address now?
Proximity bias can, at its simplest, be defined as unconsciously favouring those physically closest to us, whilst overlooking those in remote locations. It鈥檚 a well-recognised unconscious bias that pre-dates the pandemic, however, deserves greater attention than ever before, as firms begin to move out of the egalitarian state that many have been in for over a year, with the majority of employees working at home.听 As firms shift from this level playing field to a hybrid model, action is called for now, to avoid the risk of proximity bias becoming an unintended inherent trait of the new working environment.
To avoid an unwinding of the positive D&I momentum made so far, there is a need to prevent the creation of unintended in-group and out-of-group dynamics and the forming of a dual culture.听听 An 鈥榦ut of sight, out of mind鈥� mentality creates a two-tier system which will negatively impact everyone in the workplace. As flexible roles have historically been taken up by a greater proportion of women, through necessity, due to the caregiving roles they perform, they could be disproportionately disadvantaged.听The experience of the pandemic has brought transparency to the fact that caregiving roles and the domestic burden more often than not still fall upon women. The increased flexibility that the pandemic has introduced has been a game changer in levelling the playing field, by enabling women to access roles that would otherwise be closed to them due to role conflict.
鈥淎s a full time working mum of two young children, an industry that is inclusive and supports flexible working is not only critical to retaining talent within the securities lending market it will be key in attracting the next generation of talent which is vital to the growth and success of the industry,鈥� says Moylett.
But, at the same time, we run the risk of undoing these tremendous gains, if we don鈥檛 consciously protect against this bias as working away from the office becomes more prevalent.听
In summary, failing to address from the outset, could be to the detriment of the positive progress made on D&I in recent years. Getting this right, on the other hand, is at the heart of a culture of equitable inclusion and can deliver long-term benefits to this industry across an entire workforce comprising employees of all backgrounds and to society more broadly.听
Moving from the why to the how?
Adherence to the code and embedding this essential element is an important step forward in taking positive action.听Intentionality will be critical and there are many practical measures firms can consider adopting to optimise this opportunity to create impact on D&I, through embracing inclusive hybrid working models.听For example, these may include:
鈥� Use of tools and technology to support all employees, maintaining heightened levels of communication and collaboration
鈥� Creating remote working role models at all levels of leadership as well as examining gender distribution at home and in the office to ensure fair levels of hybrid access for everyone
鈥� Promoting awareness on bias and proactively stamping out prior stigmas and stereotypical views associated with flexible working, supported by positive tone from the top
In conclusion, there is a real opportunity now to use hybrid working to successfully drive a more diverse workplace, however, in parallel, it is crucial that we continually embed inclusive practices, consistent for all employees, agnostic to location. The revision to the code is an essential reminder to this industry that this will require deliberate thought and action, in order to keep the dial moving on D&I.
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