Legal Professional Privilege cannot be defeated by the FRC’s interpretation of its disclosure regime
The Market Abuse Regulations (“MAR”), implemented in the UK in July 2016, created a requirement for all firms and individuals professionally arranging or executing transactions in certain financial instruments, to report suspicious transactions and orders (STORs) to the Financial Conduct Authority (“FCA”). Previously, the requirement had been to report suspicious transactions, but the rules had not extended to orders. These reports are vital to the FCA as they indicate possible market abuse, such as insider dealing or market manipulation.
The Financial Times has recently reported that:
The number of [STORs] has soared [since] July last year. Data show that a record 3,730 suspicious transaction reports have been filed to the FCA in the first nine months of 2017 alone. This represents a 24 per cent leap on the whole of 2016, which was already the highest year on record.”
In a recent speech, the Director of Enforcement at the FCA said that as a result of transaction reporting under the new MAR rules, the FCA will be able to have an “even better view” of the market.
Mr Steward warned that MAR, together with the Markets in Financial Instruments Directive II (“MiFID II”) - a comprehensive set of EU legislation coming into force in January 2018, which creates new trading venues and extensive new reporting rules, will present a “sea change” in the level of information that the FCA is able to analyse.
Firms operating in the financial markets will need to ensure that they have fully implemented the Market Abuse Regulations and are working towards fully incorporating the changes set out in MiFID II. Mr Steward commented that:
[the FCA has] no intention of taking enforcement action against firms for not meeting all requirements straightaway where this is evidence they have taken sufficient steps to meet the new obligations by the start date, 3 January 2018… Our disposition is likely to be different where firms have made no real or genuine attempt to be ready or where key obligations are deliberately flouted.”
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