The Financial Services Authority (FSA) announced its new Market Abuse Strategy on July 2. The Regulator first emphasised the need to prevent misuse of inside information and other forms of market abuse, focusing on the need for firms’ senior management to take an active role in achieving this and the FSA’s enforcement strategy against errant firms.
In speeches by the current FSA director of enforcement on June 29 and the departing FSA chief executive on July 2, both mentioned the importance of the FSA being granted the power to offer immunity or plea bargains in exchange for agreements to give evidence. The FSA called on all firms, whether regulated or not, to strengthen their controls. The FSA’s markets division is drawing up a statement of good practice to improve standards among non-FSA regulated firms. The FSA has approached the Solicitors Regulation Authority about possible changes to the new Solicitors Code of Conduct as part of its drive to clamp down on insider trading.
The remainder of the new strategy was announced in one of the FSA’s newsletters; its Markets Division Market Watch newsletter on market conduct in which detailed good practices and appropriate high level policies and procedures for regulated firms were described. These included
- firms being less complacent about the effectiveness of their existing internal procedures;
- documented policies understood by all relevant staff;
- effective information barriers; and
- IT controls to limit access to inside information.
Significantly in light of a number of other recent reports there was no focus on particular market participants: hedge funds, private equity funds and prime brokers were not specifically mentioned or targeted.