Latest bit of red tape designed to prevent market abuse comes into force today
Financial firms will find themselves having to do more to safeguard against wrongdoings from today, as the Market Abuse Regulations come into force.
The regulations, which cover abuses such as insider dealing and market manipulation, extend and clarify the existing rules. For example, firms will be required to announce inside information as soon as possible and, where a firm delays its disclosure, it must flag the delay to the Financial Conduct Authority (FCA) as soon as the information has become public.
The new rules also impose further requirements on firms regarding accepting whistleblowing notifications.
However, the timing of the introduction of the rules, which originate from the EU, will no doubt place further pressure on financial firms that are already being forced to rethink their plans for the next few years.
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"While tactical fixes to plug gaps is reasonable in the short-term, it remains unclear what stance the regulator will take regarding non-compliance in the longer-term and whether this will vary across regions and regulators," said Ruk Permal, financial services, risk and regulation partner at PwC.
"From our initial assessments, firms need to manage the key risk of market abuse going unnoticed and unreported. That position is untenable in the environment we are operating in, and could subject firms to regulatory fines and censure, and damage to their reputation and overall market position."
Research by law firm Linklaters published around a fortnight ago discovered that a mere five per cent of firms were fully prepared for the rule change. Another fifth said that there was no way they would be completely ready by the time to the regulations were implemented.
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Any firms thinking they can wriggle out from the grasp of the Market Abuse Regulations as the UK voted for Brexit may want to think again, too. After the results of the referendum were announced, the FCA issued a statement stressing that it was business as usual as far as regulation was concerned.