FCAIn a recent speech delivered at the City Financial Global event, Julia Hoggett (Director of Market Oversight at the FCA) set out the key risks created by operating in market conditions brought on by COVID-19, and the FCA’s expectation that markets remain clean “whatever the times and whatever the challenges“.

Ms Hoggett confirmed that firms should go further than looking purely at the behaviours outlined in the Market Abuse Regulation, or ‘out of the box’ alerts, and should identify the risks associated with the new working environment, in order to put effective controls in place. She went on to highlight the following three key themes of the FCA’s risk assessment.

The scale of primary market activity

Ms Hogget stated that the markets showed “remarkable resilience” as the UK transitioned into a period of lockdown, despite volatility. Ms Hogget explained that the FCA’s focus is on markets remaining open, due to the role they play in supporting the economy and in particular enabling institutions to raise capital.

It is therefore critical for firms to have appropriate controls over inside information, and effective information barriers in place. Information barriers are particularly important now that many people are working from home.

In the current market conditions, enhanced primary market activity can also give rise to greater risks of conflicts of interest that must be managed. In addition, the definition of inside information has the potential to change radically during this period, and may now include knowledge of closure/re-opening of businesses, use of the furlough scheme, or pace of cashflow burn. Companies and their advisors must be alert to exactly what information will drive the value of their businesses.

Surveillance during volatile markets

Ms Hoggett confirmed that the FCA has spoken to firms about maintaining appropriate trade surveillance throughout the crisis, as an increase in both trading activity and volatility has led to a surge in surveillance alert volumes. She notes that “whilst the fundamentals of the market abuse offences are constant, the ways in which the risk may manifest are not. The manner of surveilling for them must, therefore, also change.” Firms should also continue to report instances of potentially suspicious activity.

New ways of working and the importance of effective culture

Ms Hoggett’s speech also highlighted the move many of us have made from office working to home working, noting that both arrangements should be equivalent – “this is not a market for information that we wish to see be arbitraged”. Firms should therefore have updated their policies and training, and put in place “rigorous oversight”, particularly in relation to the use of privately owned devices. Beyond this, firms should also remember the importance of good culture.

The speech also touched on personal dealing, including a reminder that market abuse does not only apply to those working in financial services. Ms Hoggett ended by confirming that the FCA remains committed to using the tools available to it to fight market abuse.


Businesses should take heed of the FCA’s warnings on the changing nature of market abuse in this period of COVID-19, and should seek to implement systems and processes that aim to avoid the leakage of commercially sensitive information, leading to instances of market abuse.