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Mifid II data to help FCA prosecute insider trading

Andrew-Bailey-BBA-Conference-2012-700x450.jpgNew Mifid II regulations will help the FCA clamp down on insider dealing and market abuse, MPs were told yesterday.

Responding to a question from Treasury Select Committee chair Nicky Morgan, FCA chief executive Andrew Bailey said: “We agree that [insider dealing] is something that has to have more attention. But thanks to better tools our ability to see the picture has improved.”

He said the regulator now got 30 million trade reports a day, which was helping them pinpoint irregularities in dealing patterns.

Morgan’s question followed a recent freedom of information request from The Times which found that the FCA has prosecuted just eight cases of insider trading in the past five years and secured 12 convictions.

The newspaper analysed share price movements on the day before major profit warnings, mergers or acquisitions over the last two years. In almost seven out of 10 cases, share prices fell the day before a profit warning, or rose prior to an M&A announcement.

Bailey said these findings did not come as “any surprise to us”. He adds: “The FCA is already in the process of recognising the scale of this problem.”

Bailey says the regulator has seen an increase in market abuse questions, but he doesn’t think that this necessarily means the problem has become more widespread. He said this is a function of having better data to identify issues.

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Comments

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  1. It will be interesting to see if prosecutions increase. Then the question will be whether the hundreds of millions that will have been spent on it over the next few years was worth it.

    Or could that have been spent better elsewhere?

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