ESMA report shows market manipulation related STORs outnumber insider dealing

ESMA recently published a report relating to suspicious transaction and order reports (STORs) and reiterated their importance as a source of market abuse investigations. 

The report makes it evident that Brexit has had a significant impact on the STOR-related statistics. Because of this, ESMA decided to primarily focus the main part of their analysis on STORs received during 2021 and 2022.

ESMA found that there were no major changes to the statistics over this two-year period, as the breakdown by all measures remained relatively consistent between 2021 and 2022, including:

  • the total number of STORs received totalled 6,125 in 2021 and 5,833 in 2022. Germany submitted the most raising 42% of the total STORs in 2021 and 40% in 2022, followed by France
  • the ratio of notifications by trading venues and investment firms
  • the percentage of STORs by instrument type (87% equities and bonds 7% in both years, with derivatives and other instruments covering the remainder)
  • the type of violation – alleged market manipulation accounted for 52% of the total in both years. Whereas insider dealing-related STORs accounted for 45% of the total in 2021 and 44% in 2022.

Market manipulation

One of the interesting aspects of the report is that more STORs now consistently relate to market manipulation than insider dealing. Previously (between 2010 and 2018) most STORs raised related to insider dealing. 

The increase in STORs relating to market manipulation could be a sign that firms are becoming more sophisticated in their approach to detecting potential market abuse, but it’s probably too early to say. The continued increase in electronic and algorithmic trading could also be a factor.