FCA’s work on market abuse and manipulation

On 17 June 2022, in response to recent reports about their approach to market abuse and manipulation, the FCA published a new webpage providing an update on its work in this area. The webpage describes the FCA’s data-led approach plus its use of criminal and civil enforcement tools.

Key points on the webpage include:

• Data: The FCA highlights how it takes a data-led approach. For example, listed companies send over 30 million transaction reports and 100 million order reports a day which are analysed by the FCA’s market data processor. Furthermore, the FCA uses data to publish market cleanliness statistics each year, which were quoted correctly in recent press reports.
• Suspicious transaction reports: This data is also supported by suspicious transaction and order reports sent to the FCA by market participants. The FCA received over 90 reports a week last year and each report is assessed by a specialist team who review the report and decide what further action is right for the regulator to take.
• Publication of findings: In order to support market participants to play their role in tackling abuse and manipulation, the FCA regularly publishes the findings of oversight work in its Market Watch publication. These notes provide up to date information for firms, that also facilitates their scrutiny of the market which, in turn, improves the quality of the suspicious transaction and order reports the FCA receives.
• Enforcement: Along with criminal prosecution, the FCA has taken enforcement action where it has seen false or misleading statements or other forms of market manipulation, resulting in fines for both firms and individuals. The burden of proof in a criminal case is high – beyond reasonable doubt. However, in many of the reports or concerns the FCA reviews, strong suspicion is often matched by weak or non-existent evidence. The challenge of building a criminal case begins well before the FCA reaches court and, as a prosecutor, it needs to conclude a court would be more likely than not to convict before the regulator charges a suspect.
• Intelligence: The FCA uses its intelligence to disrupt the activity of suspected serial market abusers. Often, it is the case that these individuals cross national boundaries, as such the FCA works with its international partners to bring data to bear in these cases.