Written by Ciara Davies
The FCA Director of Enforcement and Market Oversight, Mark Steward, has delivered a speech on the FCA’s recent work to tackle market abuse.
The FCA was able to report that despite the Covid-19 pandemic and Brexit, there has been an overall increase of 34% in transactions and transaction reports in 2020. There was a temporary reduction in suspicious transaction and order reports (STORs) during the first lockdown period between March and June of 2020. However, since the first lockdown STORs have returned to pre-pandemic levels across all asset classes. The STORs received by the FCA have been of high quality and are vital sources of information.
The FCA also increased its proactive market monitoring during the year and introduced some new initiatives, including a new approach to short selling reporting that allows short positions to be reported on its Electronic Submission System. This system speeds up validation provides better data and insights.
The speech drew attention to the increase of retail trading accounts in the UK during 2020, particularly in the context of Gamestop. New participation in the market is a good thing; however, there is a risk that new retail investors may become subject to misleading online marketing.
The FCA has also introduced a new market cleanliness measure, the Potentially Anomalous Trading Ratio (PATR). The PATR focuses on the underlying trading behaviour around specified price sensitive announcements and assesses whether the behaviour can be deemed anomalous.
In terms of enforcement, the FCA has been “busy and productive”. The speech concludes by highlighting some recent market abuse and insider dealing cases.