On 27 September 2016, the FCA published issue no. 51 of its
regular Market Watch newsletter, in which it addressed a number of
MAR-related issues, including: market abuse risk as managed by
information barriers and wall-crossing procedures and insider
The newsletter comments on a review of a sample of firms that
are registered market makers in small and mid-cap equities.
In relation to market abuse risk as managed by information
barriers, the newsletter notes that where physical segregation of
teams is not possible, extra steps should be taken to ensure that
information barriers are properly managed and maintained. These can
include: specific training for staff with access to inside
information, and ensuring that compliance representatives are
properly integrated with front line operations to improve
surveillance capabilities and information management.
The review found the level of documented wall-crossing
procedures to be generally poor across the firms reviewed and noted
this was of concern in view of the provisions for wall-crossed and
non-wall-crossed market soundings in Article 11 of MAR.
The newsletter concludes that the most effective approach in
this area is that followed by those firms that use the compliance
team as "gatekeepers" in all wall-crossings, deciding
whether a wall-crossing is necessary, who is the correct person to
wall-cross and the most appropriate time to do this. This
encourages a consistent approach and reduces the risks of
In relation to insider lists, the review came across several
examples where details recorded on insider lists were either
inaccurate or missing entirely. The FCA encourages firms to
consider the "need to know principle" when deciding which
individuals should be wall-crossed and so included on the insider
list, so that inside information is only disclosed where it is
information in the "normal exercise of an employment, a
profession or duties" (see Article 10.1 of MAR (unlawful
disclosure of inside information)).
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