Tackling market abuse is one of the FCA’s strategic priorities. Given recent press reports about the FCA’s approach, the FCA outlined the work it does to tackle insider trading and manipulation and to warn those who are considering attempting to manipulate the markets that the FCA will not be hesitant to act.
The FCA’s work – which is mainly data-led includes:
- Firms send over 30 million transaction reports and over 100 million order reports a day. These reports are analysed by the FCA’s market data processor who uses algorithms to detect any issues.
- The FCA also receives STORs by market participants when they have ‘reasonable grounds’ to suspect market abuse, such as insider dealing, or market manipulation. Each one of these is assessed by a specialist team, which seeks to establish whether any abusive or manipulative behaviour has taken place and what further action should be taken, if any.
- Findings of oversight work are regularly published Market Watch , which shares good practice and highlights weaknesses likely to be common in firms’ systems and controls.
- Where market abuse is detected, the FCA can investigate, report to the criminal prosecutors or issue fines.
- The FCA works with international partners to provide data and intelligence.
- The FCA states: “This work – deterring, detecting, and taking action where market abuse is suspected – is supported by a highly expert team. Our resources are not limited to one offence, such as insider dealing, or one form of action, such as criminal prosecution. The effort spans the blended approach of prevention and deterrence across all forms of market abuse. This involves the collective efforts of approximately 90 enforcement staff supported by dedicated specialist intelligence, legal and cyber resources as well as our primary and secondary market oversight teams, dedicated to tackling market abuse in all its forms.”