FSA agrees coordinated approach to market abuse cases

Under the terms of the agreement straightforward cases would be handled by the Exchanges. The expectation is that where market misconduct is limited to an individual Exchange, the alleged perpetrators are all members of that Exchange and the enforcement powers of the Exchange are sufficient to deal with the misconduct, then the Exchange itself will investigate and take enforcement action rather then the FSA. However, in more complex cases, the FSA will take things forward.

Speaking at the signing ceremony Gay Huey Evans, the FSAs Director of Markets and Exchanges Division, said:

UK markets are, on the whole, safe and clean places to do business. However, in dealing with the exceptions it is clearly in the interests of market confidence and consumer protection that we prioritise the cases that we take on in order to make the best use of our resources.

We will ask ourselves three basic questions to help determine how best to proceed:

• What is the nature and gravity of the behaviour involved?
• Who is best in a position to pursue the alleged perpetrator?
• What is the feasibility of pursuing the case to a successful conclusion?

As far as the gravity of the potential market abuse is concerned, our starting point will be the risk to, and impact on, market confidence. The factors we will take into account include the damage which could be done to the market and the extent of actual or potential consumer loss.

We will give high priority to cases where prompt action by the FSA could prevent further damage to consumers or markets. Another important factor is whether enforcement action by the FSA would have the effect of deterring future such behaviour.

Ms Huey Evans also set out the overall objective of the market abuse regime and the creation of a dedicated helpline to help deliver it:

The overall objective to the market abuse regime is to maintain and enhance confidence in the UKs main financial markets as clean, fair and efficient places in which to do business. We plan to do this by running a system that can successfully identify, investigate and penalise any cases of market misconduct. We also want to promote systems and controls that will help prevent market abuse in the first place.

We want to ensure the regime is properly understood and provide help on the application of the Code of Market Conduct. We already issue a Market Conduct Newsletter and today we are announcing a dedicated guidance helpline that will come into operation on 3 December to deal with queries on the regime from firms and the public.

Notes for editors

1. The FSAs dedicated market abuse help line number is 020 7066 4900. The line will be operational from December 3 during office hours and will be staffed by expert staff from the FSAs Markets and Exchanges Division.

2. The FSA has agreed operating arrangements with the London Stock Exchange, Virt-X, Coredeal, LIFFE, the International Petroleum Exchange, the London Metal Exchange and OM London Exchange.

3. The FSA regulates the financial services industry and has four objectives under the Financial Services and Markets Act 2000: maintaining market confidence; promoting public understanding of the financial system; the protection of consumers; and fighting financial crime.

4. The FSA aims to maintain efficient, orderly and clean financial markets and help retail consumers achieve a fair deal.