Last month, we discussed reports that the UK’s Financial Conduct Authority (FCA) had issued a questionnaire to asset managers in the country to gain insights into their market surveillance, risk management and reporting procedures around market abuse. Was this, we asked, the start of a crackdown on UK firms?
While the results of the questionnaire have yet to be made public, industry insiders expect they will expose serious shortcomings in firms’ market abuse controls. As reported in Ignites Europe, a number of respected regulatory experts and financial sector consultants are in agreement that the FCA will reveal an asset management industry that has not yet adjusted to the demands of the Market Abuse Regulation (MAR).
Introduced in 2016, MAR was created by the EU to reduce instances of market abuse, particularly insider trading, and boost confidence in its financial markets. The Regulation includes a range of reporting obligations for asset managers and for the first time puts the onus on them to carry out market surveillance duties – an obligation that has historically been borne by sell-side organizations.
The Ignites Europe report echoes what we have long suspected: a significant number of asset managers have not yet put in place the required automated market surveillance systems. The concern is that due to the significant expense associated with buying and implementing such systems, firms are trying to make do with manual processes.
At RIMES, we believe the FCA is giving its clearest signal yet that it will start cracking down on firms that are not compliant with MAR. Time is fast running out for firms to make the necessary changes to their compliance processes and systems. Those that delay further risk falling foul of the unlimited fines the FCA is entitled to impose on firms caught in breach of MAR.
The good news is that the valid cost concerns of firms can be assuaged. Rather than buying market surveillance systems and going through the disruptive process of integrating them with their existing IT infrastructure, firms can instead subscribe to cloud-based market surveillance services; such as those provided by RIMES. This is a low-cost and easy way to achieve MAR compliance rapidly and with minimal disruption to the business.
Indeed, with the FCA tightening the screw on market abuse non-compliance, RegTech managed services are arguably the best way forward for asset managers that have not yet started their compliance journeys.
RegFocus℠ MAR, our award winning solution can help you handle the many complex challenges of Market Abuse, including the Market Abuse Regulation (MAR) and MiFID II compliance. Read more here or contact us.
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