Market Watch looks at corporate finance systems and controls

The latest edition of Market Watch contains the FCA’s observations on the systems and controls corporate finance firms have in place for handling inside information about their corporate clients. It has identified a heightened risk of market abuse in firms that routinely process information about corporate clients and has looked at:

• how firms manage the number of Market Sounding Recipients they deal with – finding that many firms lacked a process to consider the appropriateness or number of MSRs they contact;
• problems of unlawful disclosure during a market sounding, that is still happening even where there are gatekeeper arrangements in place to seek consent for disclosure;
• how to share appropriate deal-specific information and the need to make sure the same level is shared with each MSR; and
• the problems caused by more than one broker sounding for a transaction.

The FCA found that smaller firms are more susceptible to compliance risks, specifically around independence of the compliance function, informality of policies and procedures and effectiveness of information barriers.

The briefing also notes the need to identify and then prevent or manage the risks arising from personal account dealing.