The latest edition of Market Watch looks at how firms can ensure compliance with SYSC 6.1.1R when dealing for overseas clients who operate aggregated accounts that provide no visibility of the UBOs.
Firms will often accept instructions to execute trades from aggregated accounts administered either by FCA authorised or overseas firms. There can be a risk that firms may unwittingly transact for UBOs who have instructed trades on their own behalf when they have previously had accounts terminated on suspicion of market abuse.
The FCA suggests measures firms might take to protect themselves, including
- making their zero tolerance approach to market abuse clear
- submitting STORs when appropriate
- requiring aggregators to provide information about their systems and controls to counter market abuse and asking them whether they will provide the identity of the UBOs if the FCA authorised firm has concerns
- asking the aggregators to differentiate between masked UBOs be assigning identifier codes so firms can see the pattern of trades for each UBO even where they do not know its identity.