The FCA has published Thematic Review 15/1: Asset management firms and the risk of market abuse (TR15/1). In TR15/1 the FCA sets out its findings following a thematic review into how asset management firms control the risk of insider dealing, improper disclosure and market manipulation, with a primary focus on equities and insider dealing.
The FCA’s key message is that overall it found that firms had put in place some practices and procedures to control the risk of market abuse. However, these were only comprehensive in a small number of firms. The FCA states that many firms need to carry out further work to ensure that practices and procedures operate effectively and cover all material risks. In particular, firms need to pay more attention to the possibility of receiving inside information through all aspects of the investment process and take steps to manage this risk. The FCA also felt that firms generally need to improve the effectiveness of post-trade surveillance as only a minority of firms had appropriate controls for these matters.
The key findings in TR15/1 focus on:
- managing the risk that inside information could be received but not identified;
- controlling access to inside information and managing the risk of improper disclosure;
- pre‑trade controls to prevent market manipulation and insider dealing;
- post‑trade surveillance;
- personal account dealing policies; and
The FCA will be writing to all the firms in its thematic review to provide individual feedback.
The FCA states that senior management of asset management firms need to satisfy themselves that their firm’s practices to manage the risk of market abuse are appropriate. This should take into account the findings of its thematic work. The FCA will follow up on its thematic work through its routine supervision.
View Asset management firms and the risk of market abuse, 18 February 2015