Search

Why is FCA not receiving more non equity related STORs?

For several years now the FCA has been repeating its concern that the reporting of STORs (Suspicious Transaction Order Reports) is dominated by suspicious transactions in equities. More specifically what the FCA has referred to as the “poster child” of market abuse: Insider Dealing. That imbalance is apparent when looking at the reporting data shown in the chart below.



In an attempt to counter this perceived reporting imbalance, the FCA has conducted visits with firms to look at their surveillance and market abuse controls, and to test the robustness of firms associated reporting. We can see from the chart below that there has been a shift in the number of reports made about fixed income.



This increase could be a reflection of better surveillance and monitoring partly as a result of the FCA round of STOR visits. Many firms with large fixed income and FX books spent efforts educating their people about STORs and the requirement to report. For example, taking the step back to remember that FX markets are not all deep and liquid and there are transactions or orders that can be placed out of normal hours for a pair or that does not reflect a counterpart’s usual behaviour. We can clearly see the increase in FX-related reporting in the chart below.



Some of these small gains in eliciting FX STOR reports must in part be attributable to the efforts in implementing industry code standards such as those of the Global FX Code and associated training. However, you would expect that the Precious Metals Code might have had a similar effect on Commodities STOR reporting, perhaps it is still too early to tell as the chart below shows a relatively static pattern.



A related concern that the FCA has expressed is the lack of priority firms attach to their market abuse controls and surveillance. The Market Abuse regime is linked with Financial Crime and FCA expects firms to be attaching similar importance to both. The STOR obligation overlaps with SARs (Suspicious Activity Reports) used to report known or suspected criminal offences to the National Crime Agency (NCA) under the Proceeds of Crime Act (POCA). It is quite logical that when the FCA receives intelligence the FCA will look at both the STORs, SARs, and Transaction Reports they have, or have not, received in relation to the subject of that intelligence. The FCA wants to see that joining of the dots happening within firms.

There are several reasons why FCA is not receiving more non equity related STORs, but the data shows that is starting to change. Make sure your firm is one that is contributing to that shift and showing the FCA that the Senior Manager Function Holders in your business are taking STORs seriously.

To enable you to review your current framework and enhance your inhouse policy and procedures we provide a STORs How to Guide and supporting Training Pack as digital downloads in our online shop.

57 views
How to Guide: MiFID II Transaction Reporting

How to Guide: MiFID II Transaction Reporting

SMCR Checklist

SMCR Checklist

Training on PRA & FCA outsourcing

Training on PRA & FCA outsourcing

Bribery and Corruption Risk Assessment

Bribery and Corruption Risk Assessment

Training Pack: Suspicious Transaction Order Reporting (STOR)

Training Pack: Suspicious Transaction Order Reporting (STOR)

Brexit Substituted Compliance Inventory

Brexit Substituted Compliance Inventory

Conflicts of Interest Register Template

Conflicts of Interest Register Template

UK Financial Crime Inventory

UK Financial Crime Inventory

Fit and Proper Assessment Template

Fit and Proper Assessment Template

UK Public General Acts Inventory

UK Public General Acts Inventory

Reasonable Steps Templates

Reasonable Steps Templates

PRA & FCA Outsourcing Checklist

PRA & FCA Outsourcing Checklist

Need some compliance advice?

Want to check best practice or request advice on your approach. Need technical support with your audit or monitoring review? Request a private consultation by video conference.

 

We offer 45 minute sessions by video conference.

regulatory consulting companies

fca compliance procedures

financial services compliance consultants

regulatory compliance consulting firms

regulatory consulting companies     fca compliance procedures     financial services compliance consultants     regulatory compliance consulting firms  skilled person

©2020 by Leaman Crellin Limited