The new Financial Conduct Authority (FCA) “bad cop, bad cop” duo of enforcement and market oversight have drawn up the battle lines when it comes to market abuse, promising “assertive supervision” as they seek “maximum impact” in deterring misconduct.
In a speech yesterday at the city’s Market Abuse and Market Manipulation Summit, co-executive director of enforcement and market oversight Therese Chambers outlined her enforcement strategy – and she pulled no punches.
Chambers and her co-director, ex-head of intelligence at the National Crime Agency (NCA) Steve Smart, intend to deliver “impactful deterrence” in a transparent and expeditious way, with an emphasis on standards – “preventing those who can’t or won’t meet our standards entering the regulated sector” – and deploying business restrictions and a “use it or lose it” approach towards those holding unused regulatory permissions.
Smart and Chambers were appointed as co-directors of enforcement and market oversight in March 2023, following Mark Steward’s departure, to support the FCA’s ongoing ambition of becoming “a more assertive, more adaptive and more innovative regulator”.
Chambers said both industry and regulators must “pull together” to stop opportunistic market abuse. “We are committed to this as we know the corrosive effects it can have on the integrity of our markets.”.
“Hitting wallets” is also a key pillar in the FCA’s strategy – since last April it has imposed fines of £41.5m for market misconduct. The regulator also promised to not shy away from cases where there may be a perceived risk to prosperity or international standing.
“Be in no doubt: pursuit of growth and international competitiveness does not mean we will back away from tough cases or cool our investigation when the going gets hot.” Encouraging and supporting market participants on the right side of the law is key, Chambers said, signalling a way for the market to behave and what the regulator expects from them.
“The first rule of enforcement club is that you do in fact talk about enforcement club,” she said. “We want to be more transparent about what we investigate, so firms will be reassured whether they are on the right track (and can pivot if they are not) and so that the public can be reassured that we are on the case.”
This transparency will extend to the regulator itself, holding it accountable to the public “by shining a light on the efficiency and pace of our investigations.”
Looking ahead, Chambers said a focus on nascent technologies will be increasingly key to its investigations and enforcement strategy.
The FCA has a dedicated cyber forensics team which processed 150 terabytes of data and 17 million documents onto its evidence management system in 2023, while the regulator is increasing its trading data coverage from 500 million records a day to over 1 billion over the next few months, deepening its coverage of both equity and FICC (fixed income and commodities) markets.
“We are looking at AI in order to assist with some of this process and are adopting more automation across the organisation,” Chambers said.
The consultation on the new strategy is open until 16 April, and Chambers emphasised the need for the entire industry to get involved.
“These risks are very real and require a whole market response – all of you… have a critical role to play.”
©Markets Media Europe 2024
