On October 31, 2023, the Financial Conduct Authority (FCA) aired its concerns on potential market abuse it has identified in its periodic assessments of trade operations and associated communication and documentation. This warning was expressed through the latest FCA Market Watch newsletter, MW75.
Central to this concern was the activity associated with market soundings under the realms of UK Market Abuse Regulation (MAR). Market soundings, by definition, involve the communication of information, prior to the announcement of a transaction, to gauge potential investor interest. In this set-up, two key players operate: the market sounding recipients (MSRs), and those who conduct and manage the market soundings and communicate with MSRs. In industry terms, these entities are referred to as Disclosing Market Participants (DMPs).
The FCA warning primarily focuses on the DMPs. It appears that the regulatory body has discovered instances of possible market abuse during their routine documentation and communication reviews which were shared in relation to the market soundings under MAR. Such instances of misconduct have the potential to undermine the integrity of the financial markets.
While the FCA, through its MW75 Newsletter, did not elaborate on the exact nature or extent of such infractions, it has highlighted the gravity of the situation by publicly expressing its concern. This serves as a stark reminder for the DMPs and MSRs, alike, to abide by the MAR in letter and in spirit, in recognition of its significance in maintaining a balanced and fair transaction environment.
For more detailed information, you can read the complete Market Watch newsletter on the FCA’s website.