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FCA speech (summary), 12 October 2020 – market abuse and coronavirus

FCA speech (summary), 12 October 2020 – market abuse and coronavirus

 

Background

  • On 12 October 2020, the FCA’s Director of Market Oversight (Julia Hoggett) gave a speech about market abuse topics related to coronavirus (Covid-19).
  • The speech contains many sections including: Risk Assessments; Primary Markets; Use of Suspicious Transaction and Order Reports (STORs); Surveillance; Personal Dealing; and Data.
  • The FCA remains keen to support all market participants to enable risk to be priced and managed and enabling institutions to raise capital when needed.
  • While the fundamentals of the market abuse offences are constant, the ways in which the risk may manifest are not. Supervision must also change.
  • The FCA expects that, going forward, office and working-from-home arrangements should be equivalent – the FCA will NOT allow this control to be weakened at all.
  • Market abuse is NOT an offence that ONLY applies to individuals working in the financial services industry. Any individual in receipt of inside information who trades while in possession of that information, or induces someone else to, is guilty of market abuse.
  • The FCA has access to significant detailed data sources and pursues many lines of enquiry every year, which help to develop and support the FCA’s risk assessments.

Impacts

These times impacted by Covid-19 topics provide many challenges for all of us, both personal and professional.  The FCA can see activity down to the individual account level: “If you trade suspiciously and you receive a letter from us asking for your reasons for trading, it is because we are watching.”

New challenges have changed the controls landscape, including control of inside information moving within a firm and leaving a firm as well as working from home.  The importance of strong wall-crossing arrangements is as great as ever.

The FCA now expects firms to have updated their policies, refreshed their training and put in place rigorous oversight reflecting the new environment – particularly regarding the risk of use of privately-owned devices.

Good culture is an important factor within firms. Compliance teams, senior management and leaders need to consider how they can reiterate and reinforce their expectations. Staff should be in no doubt about the standards expected of them.

Timeline with relevant dates to be logged on regulatory calendar

  • Review all control processes and upgrade those controls by 31 January 2021

Next steps

All people impacted by these topics should review the FCA’s full speech and consider how to implement the requirements and expectations: https://www.fca.org.uk/news/speeches/market-abuse-coronavirus

If anyone has specific questions or a need for direct help, contact our experts too.