FCA Publications: Market Watch 76 and 77
Mar 1, 2024 10:27:48 AM
Update
The FCA has released two new instalments of Market Watch. Market Watch 76 covers the FCA’s observations on ‘flying’ and ‘printing’. Market Watch 77 focuses on trading by organised crime groups (OCGs).Market Watch 76 outlines how ‘flying’ and ‘printing’ create a false impression of a financial instrument’s liquidity and/or price, so that investment decisions made by clients or other market participants could be based on misleading information.
The FCA highlighted cases of failing to deal with this behaviour in a robust and timely manner, including:
• Failing to recognise the risks of flying and printing
• Failing to implement appropriate surveillance
• Failing to submit suspicious transaction and order reports, or report to flying or printing
• Taking a long time to investigate potential misconduct.
The FCA has provided recommendations to firms on mitigating the risk of harms, including prohibiting the practices via their compliance manuals, providing staff training on flying and printing, ensuring surveillance procedures are robust, and, finally, ensuring that all instances of misconduct are dealt with clearly and consistently to deter recurrence.
Market Watch 77 sets out the FCA’s views on organised crime groups operating in equity spread bets and CFDs, highlighting some of the main activities firms should look out for:
• A pattern of trading before M&A announcements and press speculation about M&A
• Proactive recruitment of inside information sources by OCGs
• Using umbrella accounts at overseas broking firms through which the identities of the account holders may be masked
• Feeding stories about M&As to media outlets to shift share price advantageously.
The FCA has advised firms to make clear to clients that they have zero tolerance for market abuse, that they are in regular communication with the regulator, and that accounts will be terminated based on low suspicion thresholds. Advisory firms have also been asked to consider guarding staff who work in M&A advisory to avoid recruitment by OCGs.
Link: https://www.fca.org.uk/publications/newsletters/market-watch-76
https://www.fca.org.uk/publications/newsletters/market-watch-77