AIMA has submitted a response to the Financial Conduct Authority (FCA) Guidance Consultation 18/1 on Proposed guidance on financial crime systems and controls: insider dealing and market manipulation. The proposed guidance within the consultation relating to the application of SYSC chapter of the FCA Handbook has created significant concern amongst buy-side market participants that the UK criminal market abuse regime will create a de facto extension of the civil law obligations contained within Article 16(2) of MAR for firms to maintain systems to detect and report suspicious orders and transactions. The changes would potentially require buy-side firms to meet the standards of Article 16(1) of MAR to “prevent” market abuse, the latter currently limited to trading venues and market operators.

The AIMA response pushes back against the FCA’s proposals and makes three key recommendations:

• the wording of the guidance should not gold plate either MAR or SYSC, thus the obligations should remain a policies and procedures obligation to help combat financial crime – not an outright obligation to prevent it;
• the “prevention” of market abuse by clients and others is not relevant for discretionary investment managers which control the client’s activities;
• The FCA should develop separate specific guidance for discretionary investment managers, rather than seeking to apply general sell-side oriented provisions.

If members have any questions or would like to join the AIMA Market Abuse Working Group, please contact Oliver Robinson.