The latest edition of Market Watch covers:
- further observations from FCA following suspicious transaction reporting (STR) supervisory visits. FCA said that during its 2015 visits it had seen many firms offshoring or nearshoring their surveillance, and was pleased that quality assurance was high priority and that the functions seem to work well. It said firms had also questioned how the surveillance and STR activities fit within the first and second lines of defence – FCA says it sees benefit in an independent function with a direct reporting line to the board. Finally, firms have expressed a desire to avoid defensive STRs. FCA does not think it receives many such reports and is concerned firms are setting the bar for “reasonable suspicion” too high and are more likely to under-report than over-report. FCA also noted the new forms firms will need to complete for reporting under EU MAR;
- a reminder to firms of their transaction reporting obligations under the Supervision Manual. It has found several inadequacies in firms’ reporting and says firms must ensure they are reporting properly under the current rules so they are ready for the changes that MiFID 2 will require them to make; and
- key messages firms should take from FCA’s enforcement action against WH Ireland. FCA comments the case was particularly concerning because the failings it identified were in several business areas. It says firms with a broad business base must be especially alert to market abuse. It urges firms to consider their systems and controls against the weaknesses and examples given in the WH Ireland notice and says it will not hesitate to take similar action against other firms that fail to have proper systems and controls in place. Finally, it reminds firms to be prepared to comply with the EU MAR requirements from 3 July.
(Source: Market Watch Issue 50)