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FCA Reflections: Market abuse in a time of coronavirus

Posted on 25 January 2021

On 12 October 2020, Julia Hoggett, the FCA's then Director of Market Oversight, delivered a speech on the FCA's approach to market abuse in a time of coronavirus at the City Financial Global event. She covered a number of themes, of which three are likely to be of particular interest, each dealt with separately below. Her speech appears to be an attempt to reset and clearly articulate the FCA's expectations for market abuse controls in these exceptional times.

  1. Primary markets and the control of inside information

Noting the resilience of UK wholesale markets during the pandemic, Hoggett emphasised "the fundamental need for institutions to ensure that they have appropriate controls over inside information and effective information barriers".

She mentioned the following as examples of where heightened attention may be required:

  • "Firms regularly reviewing how many people are permanent insiders in their organisation and whether they are necessary – including in firms' technology divisions."
  • "Given enhanced primary market activity and potentially indeed mergers and acquisition activity going forward, the importance of strong wall-crossing arrangements."
  • "Market participants ensuring that they have proper controls in place to recognise the point during transactional discussions with an issuer at which to restrict themselves from trading in relevant securities."

Unsurprisingly, Hoggett highlighted that "what constitutes inside information may change radically during the pandemic". She mentioned a number of examples including, "knowing an entire businesses' operations would have to shut or, indeed could open again; knowledge of whether a company had utilised the furlough scheme or any of the pandemic lending schemes". Firms and their advisers will need to be alert given the potential shift in consideration as to what constitutes inside information.

  1. Surveillance and new ways of working

Hoggett stated that "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."

All firms will be expected to have updated policies and procedures, refreshed relevant training and put in place rigorous oversight given the new environment, particularly around privately owned devices. Hoggett relied on the importance of having a culture that minimises the risk of poor conduct occurring in the first place, noting also that companies should remind staff of their first line of defence duties.

  1. Personal dealing

In light of increased personal dealing during the pandemic, Hoggett reiterated that "market abuse is not an offence that only applies to individuals working in the financial services industry. Everyone must comply with MAR and criminal law."

She noted the FCA's particular focus on "single stock events", that is "the potential that individuals within listed companies, or with access to information about listed companies – were inappropriately utilising that information to make a profit or avoid a loss in the relevant securities." Hoggett emphasised that the FCA is "exceptionally focused" on this type of event and that the FCA can "see activity down to the individual account level". It is plainly right that COVID increases the chances and the financial imperative for bad actors to commit misconduct. Again, firms will have to be alive to these increased risks.


The FCA has clearly set out its expectations with regard to a firm's control environment in this new world and, particularly, that office and working from home control arrangements should be equivalent. Further, with this speech, it has issued a warning to all individuals who trade in financial markets not to engage in market abuse as the FCA can "see activity down to the individual account level". Ensuring market integrity is one of the FCA's objectives. Maintaining clean markets, particularly at this time, is clearly a top priority for the FCA. Firms and individuals should heed these warning as it seems likely that further enforcement activity is on the horizon. Being prepared is essential in light of the issues and expectations raised by the regulator.

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