FCA: remote working no excuse for ignoring trade surveillance

FCA: remote working no excuse for ignoring trade surveillance

The FCA said: “despite 'operational challenges' it still expects traders to comply with all market abuse regulations”

The Financial Conduct Authority released their Market Watch report on May 27th, reiterating its statement that all market participants must follow all regulations and encouraging financial firms to review their market surveillance systems to ensure suspicious transactions are detected whilst traders are working from home during the pandemic.
“We recognise the uncertainty created by the coronavirus crisis and operational challenges arising from the public policy on social distancing. However, we expect all market participants, including issuers, advisors and anyone handling inside information to continue to act in a manner that supports the integrity and orderly functioning of financial markets. This includes complying with all their obligations under relevant regulation including the Market Abuse Regulation (MAR).” – FCA
The regulator’s statement suggests a significant step-up from existing EU legislation. Banks, hedge funds and asset managers have had to adapt to new working conditions and overcome technological challenges presented around how existing systems and controls that they have put in place to prevent insider trading are now applied in a remote working environment. These controls and procedures must be adhered to effectively protect against unlawful insider activity with the same dedication that is required in an office environment.  
The sudden shift to mobile communications has raised concerns surrounding conduct and overall resilience. In a recent poll conducted through 1LoD, Truphone found that 73% of industry leaders expect mobile recording to increase compared to pre-COVID times. A resilient and robust business continuity plan is paramount in order to manage operational risk, and a reliable mobile network is a key factor in those plans.  
Paul Liesching, Truphone’s Global Head of Financial Markets participated in 1LoD’s digital debate ‘Operational Resilience’ where the impact of Covid-19 on compliance within the industry was discussed in detail as it pertains to the operational resilience of a firm.  
“Since the COVID-19 crisis started, we’ve seen a 20-fold increase in voice traffic, and for some of our customers it’s gone up a hundred times. Mobile has gone form an ancillary to a primary communications device. The voice aspect is significant because global carriers have been focusing on increasing their data capacity as voice volumes have reduced, so this sudden reversal has caused capacity and resilience issues for mobile network operators globally.”
The FCA’s statement reminds firms of their obligations, and that to ensure continued resilience, policies and technologies around surveillance and mobile need to be addressed.
Read the report in conjunction with 1LOD Digital Debates to explore the following: 

•    What operational resilience means during a crisis
•    How the COVID-19 outbreak has affected reliance on mobile communications now and in the future when it comes to recording compliance
•    The importance of third parties to banks during operational crises to aid resilience
•    The importance of diverse datasets to identify risk signals  
•    Adapting testing processes from scheduled testing cycles to periodic scheduled testing cycles to risk indicator led testing cycles

You can see the FCA’s full statement here.

Related articles