FCA looks at impact of market soundings on quality

The FCA has looked at how market soundings in UK equity capital market transactions in UK listed shares impact on market quality. It worked with 5 banks, and looked at 63 transactions, 90% of which were market sounded. It found that trading volumes fell during the sounding period, but it did not see any material impact on other metrics. Generally, around 30 investors were sounded, although in one case the FCA looked at it was nearly 90.

The FCA has no specific recommendations for firms, nor any immediate action points following the study, although it has reminded firms that the risk of inside information leaking may increase as the scale of a market sounding grows. It will also take views on UK MAR that it sought during the exercise into consideration if making any future changes to that regime.