Financial Conduct Authority  

FCA warns on market abuse when working from home

FCA warns on market abuse when working from home

The City watchdog has fired a warning shot over market abuse amid the coronavirus crisis and highlighted its security requirements for those working from home. 

Speaking at a City Financial Global event yesterday (October 12) Julia Hoggett, director of market oversight at the Financial Conduct Authority, said security arrangements for staff privy to insider information should be the same when working remotely than in the office.

Ms Hoggett said: "Our expectation is that going forward, office and working from home arrangements should be equivalent – this is not a market for information that we wish to see be arbitraged.

"New challenges, including controlling inside information moving within a firm and leaving a firm may also manifest at times like these.

"In initially instituting social distancing in the office some firms were challenged in terms of supporting the appropriate physical distance to maintain information barriers.

"At home, this is equally important, where inside information may need to be kept from partners or flatmates."

The director for market oversight said many market insiders were still working from home even as some trading floor staff had returned to the office. 

Ms Hoggett said the risk of inside information being shared at home had "absolutely always existed" but it was now "all the more important and acute".

She added: "While scenarios emerged early in the pandemic where the usual levels of recording and surveillance were not possible, our experience suggests firms have now overcome these challenges. 

"We expect firms to have updated their policies, refreshed their training and put in place rigorous oversight reflecting the new environment – particularly regarding the risk of use of privately owned devices.

These policies should be demonstrable to us and to your audit teams. It should go without saying that policies should prevent the use of privately owned devices for relevant activities where recording is not possible."

An 86-page sector views report published by the FCA earlier this year identified market abuse as one of six main areas of potential detriment to consumers in the investment management market. 

When the regulator moved to postpone non-essential work in the face of the unfolding coronavirus pandemic in March it promised to remain vigilant to potential misconduct, warning there were some who would see the uncertain times as an opportunity for market abuse. 

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