In its latest edition of Market Watch (December 2018), the FCA updates firms on its findings following a review of industry implementation of the Market Abuse Regulation (MAR). The review involved the FCA meeting with firms, surveying issuers and asset management firms, and the FCA analysing its own data.
The FCA’s main message is to reinforce the responsibility every market participant has in protecting market integrity. It expects firms to be vigilant and proactive in preventing and responding to market abuse. In particular, the FCA explains that the most effective compliance it saw during its review involved market participants being able to demonstrate that their risk assessments were calibrated to the markets and the asset classes in which they operated. In addition, the better systems are flexible and responsive to changes in their business, market practice and the regulatory environment. These changes should include consideration of new technologies and vigilance in being alert to potential new forms of abusive behaviour.
During its review, the FCA found that many market participants have a good understanding of their obligations under MAR and have configured their systems and controls accordingly. However, it found that there remain some areas where firms are struggling to comply, including the surveillance of all orders and transactions. The FCA emphasises that it expects all firms now to be fully compliant with the obligation to undertake quote surveillance.
Topics considered by the FCA in its newsletter include:
- suspicious transaction and order reports (STORs);
- market soundings;
- cleansing following a sounding;
- insider lists;
- obligations for issuers under MAR; and
- manufactured credit events.