Compliance officer bulletin - Market abuse

03 October 2014

Maintaining confidence in markets and the financial system and preventing and reducing financial crime form the primary objectives of financial regulators globally. The detection and prevention of insider dealing, market manipulation and other forms of market abuse1 forms a major component of regulatory monitoring, investigation and enforcement activities globally and is expected to remain a central focus.

During 2013, 45 per cent of FCA/FSA fines (by number of enforcement final notices) imposed on individuals and 73 per cent on firms related to market abuse and the equivalent number for the SFC in Hong Kong was 96 per cent and 53 per cent respectively.2 In the US, enforcement actions relating to market abuse (insider trading, market manipulation and financial fraud/issuer disclosure) accounted for 24 per cent of the total number of actions taken by the SEC in fiscal year 2013. Market abuse also accounted for one of the largest proportions of investigations of any category in both the UK and Hong Kong.3 Further FCA enforcement data and policy considerations are set out in section 3 of this Bulletin.

One of the three operational objectives of the FCA is to protect and enhance the integrity of the UK financial system. The FCA has explained its proposed general approach to advancing its objectives in a July 2013 guidance paper.4 This approach has been subsequently ratified in the FCA’s 2014/2015 Business Plan. In relation to its market integrity objective, the FCA will be concerned with the soundness, stability and resilience of the financial markets, the transparency of the price information process in those markets, combating market abuse, the orderly operation of the financial markets and reducing financial crime in the UK financial system.

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This article originally appeared in the compliance officer bulletin.