On 30 September 2021, the Dutch Authority for the Financial Markets (Autoriteit Financiële Markten, the AFM) published the fourth edition of the AFM Market Watch. This edition of the AFM’s recurring newsletter provides detailed information on the prevention and detection of market abuse.
The AFM states that market participants play an essential role in preventing and detecting market abuse by submitting Suspicious Transaction and Order Reports (STORs). Although the number of STORs received by the AFM has increased in recent years, the AFM expects market participants to remain vigilant and be proactive in preventing and responding to market abuse. To increase the detection and reporting of market abuse, the AFM expects market participants to improve their surveillance and detection systems. The AFM plans to visit market participants on-site to have a closer look at their surveillance systems and STOR procedures. In addition, the AFM can and will give feedback about the quality of a STOR if needed. The AFM also points out the obligation for market participants to conduct an annual audit of their arrangements, surveillance systems and procedures.
The AFM Market Watch provides insight into the received STORs and notifications, follow-up actions by the AFM (in many cases non-public) and points of attention for market participants to improve the effectiveness of surveillance and the quality and quantity of STORs.
This edition of the AFM Market Watch concludes with the following general points that market participants should note:
- Focus not only on suspicious orders and transactions by clients but also by your own personnel.
- Trade surveillance should be an agenda item at management meetings.
- Regular training of personnel on (surveillance of) market abuse is very important.
- Adjust your surveillance systems to your own unique situations and in response to new trends and/or new types of market abuse.