FCA Turns Up the Heat on Market Abuse Controls

Recent activity points to the FCA rapidly increasing its focus on market abuse risk, trade surveillance and controls. This activity possibly pre-empts upcoming thematic work or supervision and enforcement work in this area.

Market Abuse was referenced as damaging to wholesale markets in the FCA’s 2018/19 Business Plan and the regulator published proposed new guidance (for consultation) back in March of this year, with a new chapter in the Financial Crime guide dedicated to good practices in relation to detecting, reporting and preventing insider dealing and market manipulation (to assist in complying with the Market Abuse Regulation (‘MAR’)). That final guidance is keenly awaited.

“For an effective approach to enforcement, the FCA will not just focus on imposing larger and larger penalties. Sanctions are only one element as good enforcement requires robust, accurate and faithful processes for detecting misconduct in all its guises and acting quickly and effectively.”

- Mark Steward, Director of Enforcement and Market Oversight Financial Conduct Authority, 14th June 2018.

However, adding more recent intensity, the FCA sent out a Questionnaire “The Risk of Market Abuse in Asset Management Firms” in July this year to a broad range of firms, requesting details on their arrangements and procedures. This focused on the way firms’ investment and execution strategies influence the controls it has implemented, including policies, surveillance, personal account trading procedures, and staff training.

Then, towards the end of September, the regulator published Market Watch 56 which included ‘observations’ and several key pointers to the FCA’s expectations on market abuse surveillance.

This can be considered a clear message to firms and points to a possible examination of surveillance and compliance controls relating to market abuse and a probing of firms’ internal education to further evidence efforts to prevent market abuse.

How We Help

ACA offers a range of market abuse solutions, including:

• Market Abuse Thematic Review: a deep-dive review, benchmarking, and testing of your firm’s market abuse arrangements to help mitigate the risk of insider dealing, improper disclosure, and market manipulation.
• Market Abuse Controls Review: focused and cost-effective assessment of your firm’s policies, procedures, monitoring programme, surveillance techniques, and controls environment.
• Market Abuse Surveillance Solution technology: Provides automated in-depth trade surveillance to help identify items of interest and non-compliant trading and investment activity. The system offers a case management tool that can track, and store emails, reports, and research related to each investigation.
• Employee Compliance Solution technology: an integrated solution for managing your firm’s code of ethics compliance activities related to employee personal securities trading monitoring, attestations, reporting on gifts, political contributions, outside activities, and more.

Download our Guidance on the UK’s Market Abuse Regime

For More Information

Should you have any questions related to the above, or wish to enquire further about these services, please Contact Us or call +44 (0)20 7042 0500.