FCA has reported on the practices of ‘flying’ and ‘printing’ in Market Watch 76.
It has described these practices (which it originally raised in Market Watch 57) as:
- ‘Flying’ is where a firm tells clients that is has bids or offers that are not supported by, nor derived from, an actual order or a trader’s instruction; and
- ‘Printing’ is where clients have been told that a trade has been executed at a specified price and/or size, when there has been no such trade.
These practices are misleading and customers may suffer financial harm as a result. FCA reports that there are still instances of flying and printing in several markets. It has also noted cases of management failing to recognise the risks of this behaviour and putting in place proper surveillance. It also found firms were not submitting appropriate reports and were taking a long time to investigate potential misconduct.
Recommendations for firms to mitigate the risks to customers include ensuring:
- firm compliance manuals prohibit flying and printing;
- senior management make sure to communicate their expectations clearly and might consider requiring attestations of compliance;
- staff training is given on the nature and prohibition of flying and printing;
- ensuring flying and printing surveillance procedures are robust; and
- clear and consistent disciplinary procedures for dealing with misconduct.