Since our last update, there have been some significant milestones in the FSA’s fight against market abuse. The European Commission has also published its proposals for reform of the European market abuse regime.
This briefing reviews developments in the UK and at EU level over the last six months, and identifies some of the key issues firms should be considering to stay abreast of changes in this area.
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- The FSA has been increasingly focused on targeting market abuse in financial institutions
- The FSA has shown itself willing to use the full range of statutory powers available to it, obtaining the first injunctions to prevent market abuse
- Recent investigations and enforcement action illustrate greater cross-border regulatory cooperation and focus
- The FSA has sought early publicity in market abuse cases through the publication of decision notices, in spite of pending challenges before the Tribunal
- Fund managers should consider reviewing their controls in the light of warnings contained in recent enforcement cases
- Firms operating in the commodities markets should be aware of the increased regulatory focus on activity in those markets
- Further record fines have been imposed
- There is some evidence of an increased appetite to challenge the FSA in the Upper Tribunal – in two recent cases the Tribunal concluded that the FSA’s intended penalties were excessive
- High-frequency and algorithmic trading continue to attract heightened regulatory attention and further regulation is in prospect
- The European Commission has proposed reforms to the market abuse regime, which aim to address gaps in the coverage of the regime by increasing its scope, and to increase harmonisation across Europe