The Financial Conduct Authority (FCA) has made no secret of its intention to crack down on firms and individuals that fail to meet their obligations under the Market Abuse Regulations (MAR) and FCA rules.
In March, substantial fines were dished out – over £60 million in total - when two companies failed to provide accurate and timely transaction reports. Unsurprisingly, the FCA stated “If firms cannot report their transactions accurately, fundamental risks arise, including the risk that market abuse may be hidden” and “…transaction reports help the FCA identify potential instances of market abuse and combat financial crime.”
Following these, 10 April saw the Upper Tribunal uphold the Final Notice issued by the FCA on 7 June 2018 to fine a company £409,300 for a breach of Principle 3, relating to “failing to take reasonable care to organise its affairs responsibly and effectively to ensure potential instances of market abuse could be detected and reported.”
In January 2018 yet another firm was in breach of Principle 3 and was fined £1 million by the FCA for poor market abuse controls. The FCA press release stated this was “for failings in its post trade systems and controls for identifying and reporting suspicious transactions”.
Despite all this it’s worth noting that following MAR implementation in July 2016, which changed the requirement from reporting of suspicious transaction to “Suspicious Transaction and Order Reporting” (STOR), the number of suspicions reported has increased from 3,008 in 2016 to 5,495 in 2018. In 2010 just 509 were reported.
Individuals have not escaped the FCA either. Two former employees of a broker - the ex-chief financial officer and the ex-financial controller - were fined £11,900 and £105,000 respectively for engaging in market abuse. On top of the fines they were both permanently banned from performing any function related to any regulated activity.
There are others but suffice to say the FCA is turning up the heat, which means a busy time for senior managers, compliance and internal audit professionals.
UK Finance and ACA Compliance will be holding half-day Market Abuse and Trade Surveillance workshops on Wednesday 29 May, hosted by a former trader and subject specialist. The workshops will help senior managers and compliance teams ensure their systems and controls to prevent, detect and report market abuse are adequate, effective and stand up to regulatory scrutiny.
Access on-demand a complimentary webinar, FCA turns up the heat on trade surveillance and market abuse.
For more information
Please complete our contact form or call our market abuse experts at +44 (0)20 7042 0560.
Click here to learn more about our open training courses covering market abuse, trade surveillance, senior management obligations, governance and the Compliance Officer's roles and responsibilities.
About the Author
Terry is the Head of Training Solutions within ACA’s Compliance Consulting team.
With 45 years’ experience in senior roles in financial services organisations, Terry specialises in operational risk management, internal audit, financial crime prevention and general regulatory compliance.
Prior to joining ACA, Terry was a consultant and trainer at The CCL Partnership. There he provided advice and training to firms on regulatory compliance and risk management, particularly relating to financial crime prevention.
Terry is a Chartered Fellow of the Chartered Institute for Securities and Investment (FCISI), a fellow of the Institute of Internal Auditors (FIIA) and a former Certified Fraud Examiner (CFE).