The Financial Conduct Authority (FCA) has recently published its latest Market Cleanliness (MC) report for the UK equity market. The report looks at the level of abnormal movement in share price 48 hours before a takeover announcement. The statistics produced are one of the tools the FCA uses to monitor activity that might be insider dealing.
This year's report identified that almost 38% of takeovers in 2024 were preceded by unusual trading.
The statistics
The FCA has published these statistics since 2014, but the methodology was revised for this year. It now incorporates an intraday trading variable, an addition aimed at making the statistic more robust to periods of heightened market volatility.
There are still limitations, however. The MC statistic is limited to positive price movements within the 48-hour period pre-takeover offer announcement. It also cannot differentiate price movements arising from legitimate causes (e.g. correct target company predictions by financial analysts or journalists).
Although not directly comparable to previous years due to the improved methodology, this year's MC statistic of 37.8%, is well above the five-year moving average of 32%.
Impact
The FCA's five-year strategy proposed the use of technology to more effectively identify abnormal trading, and given the FCA's focus on market abuse and insider dealing, this MC statistic will be interrogated. Although it is possible that some of the activity is as a result of more sophisticated analysts properly predicting events, it is highly unlikely this will account for it all.
As financial crime has climbed to the top of the FCA's agenda, we predict these statistics will increase the number of FCA investigations. The FCA is able to investigate a range of conduct from unlawful disclosures under the UK Market Abuse Regulation (MAR); such as, deliberate leaks to the press, as well as civil and criminal market manipulation and insider dealing.
The FCA will also be encouraged by its recent success with insider dealing prosecutions. Janus Henderson analyst Redinel Korfuzi and his sister, Oerta Korfuzi, were sentenced on 4 July 2025 to a combined period of 11 years for insider dealing and money laundering worth £1 million. The FCA has confirmed it is pursuing confiscation proceedings in the case. In May 2025 two day traders, Matthew and Nikolas West, pleaded guilty to insider dealing which resulted in profits of £42,948.
Our Financial Services and White Collar Crime & Investigations teams are able to assist clients in navigating FCA investigations. For further information, please contact a member of our team.