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16 September 2025

Market Abuse – FCA Publishes Market Watch 83 On Market Soundings

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Herbert Smith Freehills Kramer LLP

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The FCA has published Market Watch 83 which highlights compliance risks and best practices for corporate finance firms advising small and mid-cap issuers, particularly around handling inside...
United Kingdom Finance and Banking

The FCA has published Market Watch 83 which highlights compliance risks and best practices for corporate finance firms advising small and mid-cap issuers, particularly around handling inside information and market abuse controls.

The FCA makes the following observations in relation to market soundings – where inside information is selectively disclosed to potential investors to sound out their views ahead of a capital raising or other transaction – to help firms benchmark their systems and controls:

  • Number of market sounding recipients – Firms should have procedures in place to manage the number of recipients during market soundings to limit the flow of inside information and ensure there is a clear justification for sharing it;
  • Disclosure controls – Firms should have "gatekeeper" arrangements, allowing only "wall-crossed" individuals to receive inside information, to ensure a consistent approach and minimise opportunities for leaks;
  • Information consistency – All recipients should receive the same information about a deal – approved scripts are recommended; and
  • Broker involvement – Where multiple brokers are involved, it is important to check whether a market sounding falls within the safe harbour. For example, where an issuer‑appointed broker engages a second broker to conduct market soundings, the second broker would not benefit from the safe harbour.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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