FCA: Market Conduct and Transaction Reporting Issues

The most recent FCA  newsletter on market conduct and transaction reporting issues, Market Watch 65, covers how the inappropriate handling of information requirements can compromise market abuse investigations. In addition, the document highlights data quality issues found on transaction reporting under the Markets in Financial Instruments Regulation.

The Newsletter stresses that firms should keep information requested such as insider lists, corporate action chronologies and copies of communications confidential. This information should not be shared outside the firm’s Compliance department without the FCA’s approval. To clarify, if the firm needs to engage with other departments, the matter needs to be discussed with the regulator first so they can provide recommendations regarding next steps.

According to the regulator, the sharing of unauthorized information can lead to reputational damage and regulatory action. The risks are high, the spread of knowledge of enquiries and investigations can lead to inappropriate destruction of evidence.

Furthermore, the FCA has identified some data quality issues around the reporting obligation set out in Article 26(2) of MiFIR. The issues found include:

• failing to submit transaction reports for transactions executed in non-EEA listed indices or baskets composed of one or more financial instruments admitted to trading on an EEA trading venue.
• inconsistent dissemination of trading venue transaction identification codes (TVTICs) by trading venues to investment firms and failure by investment firms to report TVTICs accurately.
• wrongly reporting a country code on the country of branch for the buyer and seller, in these fields where the buyer or seller was not a client of the firm, or using these fields to highlight the geographic location or nationality of the buyer or seller.
• lack of robust systems in place to detect errors in reporting; firms cannot rely upon the FCA’s acceptance of a report that such report was accurate.

Transaction reports remain a fundamental part to prevent, detect and investigate market abuse. The FCA expects firms to take note of all observations and issues found and review their transaction reports to verify their completeness and accuracy. It is important to ensure that all transaction reports affected by an error or omission have been identified and corrected. To read all FCA recommendations published on the Newsletter, please visit fca.org.uk

The FCA is closely supervising firms and requesting information to prevent insiders from taking unfair market advantage. MyComplianceOffice makes selective insider information sharing a whole lot easier, to protect your firm when it comes to the disclosure of material non-public information (MNPI) in compliance with the FCA Market Abuse Regulation.

To learn more about how we can assist, visit our Insiders & MNPI Management page or download our brochure for more details about our solution.