FCA releases Market Watch 71

In today’s Market Watch 71, the Financial Conduct Authority (FCA) has taken the opportunity to highlight to firms the importance of compliance with obligations laid out in the UK Market Abuse Regulation (MAR) to include personal information in insider lists. The regulator also reiterates the importance they attach to firms maintaining accurate insider lists and reducing access to inside information to employees to prevent market abuse.

Insider lists

The newsletter draws attention to firms that have provided insider lists in response to regulatory requests which do not contain personal information. The lists should include telephone numbers, dates of birth, and national identification numbers. The FCA uses this data to cross reference the information with MiFIR transaction reports, MAR suspicious transaction and order reports and other information sources. Without accurate and complete information, the FCA’s ability to review potentially suspicious trading is hindered. Firms are reminded that insider lists must be in the format and include the information set out in the UK version of Implementing Regulation (EU) 2016/347 and that these technical standards are legally binding.

Personal identifiers

Personal information is also required in firms’ transaction reports and must be used to identify the ‘investment decision maker’ and ‘execution decision maker’ (i.e. a firm’s employees), whilst also being used to identify clients of the firm who are natural persons and where applicable, the client’s decision makers. The same standards are used for completing the details provided in ‘insider lists’ and a firm’s transaction reports. These are found in Article 6 of RTS 22. The FCA reminds firms that the first priority national identifier for UK nationals is the national insurance number when reporting to the FCA, and of course the passport number when reporting UK nationals in the EU. Read our recent blog on this topic.

Getting these identifiers correct in a transaction report is clearly important to the FCA as it has reminded firms of their duty to get this right several times. In both Market Watch 59 and 62, it highlighted that first priority national identifiers must be used wherever available to identify natural persons in transaction reports. Again the FCA mentioned this obligation in October’s Market Watch 70.  The regulator stressed the need for firms to capture this information correctly at onboarding and drew attention to firms who offer services to retail clients electronically, as being particularly weak in this area.

Important for all NCAs

Correctly identifying individuals is important to all national competent authorities in Europe and they all have similar duties to the FCA in monitoring for market abuse. 

The CSSF in Luxembourg stressed the importance it attaches to this field in a notice to firms in February this year and highlighted the following failings:

  • Use of CONCAT code for nationals where this code is not allowed
  • The CONCAT code was not used for nationals where it is the only possible identifier
  • Use of an identifier for non-EEA nationals other than the National Passport Number or CONCAT code
  • The CONCAT code is not correctly constructed when compared with the other personal data provided in the report
  • The national identifiers provided in the transaction reports do not comply with the format as described in ESMA’s Q&A on MiFIR data reporting.

Clearly getting the personal identification correct within reporting is very important to regulators allowing them, borrowing British television presenter Shaw Taylor’s phrase, to ‘Keep ‘em peeled’, in their efforts to keep markets clean. And perhaps equally important to individuals keeping on the right side of MAR, correct identification allows regulators to quickly ‘eliminate people from our enquiries’.

  • Read Market Watch 71 on the FCA’s website
  • For a conversation with Matthew about the topics above, or how Kaizen can help you achieve accurate and complete transaction reporting, please contact us.