The FCA has published its latest issue of Market Watch, its newsletter on market conduct and transaction reporting issues.
The FCA refers to a previous issue of Market Watch (issue 48) in which it highlighted concerns about firms publishing incorrect volume data and the possible market abuse risks related to this practice. The FCA remains concerned about the use of trading platforms and persistent chat systems by broking firms, to advertise prices which are not supported by a client order and trades which they claim have been executed, but are in fact fictitious.
The latest issue of Market Watch explains what ‘flying’ and ‘printing’ are and sets out the FCA’s concerns. ‘Flying’ involves a firm communicating to its clients, or other market participants, via screen, instant message, voice or other method, that it has bids or offers when they are not supported by, or sometimes not even derived from, an order or a trader’s actual instruction. ‘Printing’ involves communicating, by one of the above methods, that a trade has been executed at a specified price and/or size, when no such trade has taken place.
Firms should consider the points raised by the FCA about ‘printing’ and ‘flying’ and the processes that they have in place for training and informing staff about the potentially abusive nature of these practices. In addition, firms should review the degree to which they can monitor trading platforms and persistent chat systems to identify instances of ‘printing’ and ‘flying’. If a firm identifies any areas of concern, they are expected to conduct an assessment. If such practices have occurred the FCA state that they must be informed.