Market abuse controls that will withstand an FCA visit

When it comes to market abuse risk assessments, along with effective policies and procedures, the key concept to avoid is ‘generic’. Damon Batten provides a steer on a range of areas to consider before the regulator comes knocking.

Damon Batten (www.bovill.com/person/damon-batten/) is practice lead for Capital Markets at financial services regulatory consultants, Bovill.

Market abuse is currently a hot topic for the Financial Conduct Authority. The regulator is asking increasingly difficult and detailed questions of firms, right down to the individual calibration of alerts and specific field indicators. There have been a number of significant fines in the past couple of years for non-compliance with market abuse regulations, and many of these were for weaknesses in the control environment itself, rather than there being any actual evidence of market abuse occurring. We are regularly contacted by clients concerned about an upcoming FCA visit or data request. In our recent research on the topic, 37 per cent of respondents said they were either unsure or not confident that their market abuse risk assessment would stand up to FCA scrutiny.