Market Abuse Risk / Controls Assessments

Market abuse enforcement cases continue to be a key area of focus for the FCA and the SEC, including both insider trading and market manipulation cases.

However, a more recent trend, since at least 2014, is for the FCA to conduct market abuse controls assessments on firms – in particular alternative investment managers – and to take action against firms where deficiencies are identified, even in the absence of any suspected market abuse.

It is critical therefore that firms proactively ensure that their market abuse controls are fit for purpose, and effective in mitigating the risk of market abuse. Importantly, firms should also ensure that these are in line with the FCA’s expectations because, despite the lack of detailed rules in this area, the FCA has shown that it has clear expectations on what is required and will act against any perceived shortcomings.

This imperative has only increased as a result of the introduction of the EU Market Abuse Regulation in 2016, which has further raised the bar in this area. The FCA has recently indicated that the honeymoon period for these new requirements is over and firm should by now be fully compliant.

Greyline’s U.K. division has experience in conducting such reviews for large and mid-size alternative investment managers, including a number of the top firms in the U.K. This includes being part of the FCA visit teams conducting these assessments starting in 2014/2015, leading a number of assessments and more recently conducting similar assessments in private practice.

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