October 24, 2020

Volume X, Number 298

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FCA Publishes Newsletter Market Watch 65

On September 7, the UK’s Financial Conduct Authority (FCA) published the 65th edition of its Market Watch newsletter on market conduct and transaction reporting issues (the Newsletter). The latest issue provides market participants with guidance on (1) FCA information confidentiality requirements; (2) documents subject to legal professional privilege (LPP); and (3) highlighting certain data issues when transaction reporting under the Markets in Financial Instruments Regulation (EU) No 600/2014 (MiFIR).

In the Newsletter, the FCA stressed the requirement for firms to keep information requests sent by the FCA to the firm strictly confidential and not discussed with staff outside of the firm’s Compliance department without the FCA’s prior agreement. Firms that do not comply with the confidentiality requirements run the risk of reputational damage and regulatory action. The FCA urged firms with FCA’s consent to carefully select staff in another department of the firm and inform them not to contact other staff without informing Compliance, who should seek the FCA’s approval.

Furthermore, the FCA stated that material relating to firms’ clients that could be subject to LPP should not be submitted as an attachment to a suspicious transaction report or market observation as it may be disclosable by the FCA in the event of an enforcement action being taken. To avoid a potential breach of LPP, reports should not include material such as direct text extracts or quotes; however, firms should disclose the presence of such material to the FCA where relevant to the notification.

On transaction reporting, and in connection with its 59th and 62nd editions of Market Watch, the FCA has further identified issues with the quality of data being submitted within the MiFIR transaction reporting regime, including:

  1. failing to report the immediate rather than the ultimate underlying instrument for transactions executed in derivatives;

  2. inconsistent dissemination of trading venue transaction identification codes (TVTICs) by trading venues to investment firms and failure by investment firms to report TVTICs accurately;

  3. completing the country of branch field when the buyer or seller was not a client of the firm or using such field to highlight the geographic location of the buyer or seller rather than the branch that received the client order; and

  4. not having robust systems in place to detect errors in reporting; firms cannot rely upon the FCA’s acceptance of a report that such report was accurate.

The FCA reminded firms to review transaction reports and check their completeness and accuracy prior to submission.

The Newsletter is available here.

©2020 Katten Muchin Rosenman LLPNational Law Review, Volume X, Number 255
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About this Author

Carolyn H. Jackson, International Attorney, Katten Muchin law firm
Partner

Carolyn Jackson is a partner in Katten Muchin Rosenman UK LLP and is a Registered Foreign Lawyer. She provides US financial regulatory legal advice to a broad range of market participants, including commercial banks, investment banks, investment managers, broker-dealers, electronic trading platforms, clearinghouses, trade associations and over-the-counter derivatives service providers.

Carolyn guides clients in the structuring and offering of complex securities, commodities and derivatives transactions and in complying with US securities and commodities laws...

+44 0 20 7776 7625
Nathaniel Lalone, Katten Muchin Law Firm, Financial Institutions Attorney
Senior Associate

Nathaniel Lalone, a partner at Katten Muchin Rosenman UK LLP, has a broad range of experience in the regulation of financial products and financial markets, and frequently provides regulatory and compliance advice to trading venues, clearing houses and buy-side firms active in the over-the-counter (OTC) derivatives, futures and securities markets. He is actively involved in advising clients on the implementation of MiFID 2 and MiFIR in the European Union as well as the international reach of US financial services regulation. He also has significant experience with structuring and documentation relating to OTC derivatives and structured products.

Prior to joining Katten, Nathaniel was a member of the US Regulatory and the Derivatives and Structured Finance practices at Allen & Overy LLP.

+44 0 20 7776 7629
Neil Robson, private equity fund managers counselor, Katten Law Firm, London
Partner

Neil Robson, a regulatory and compliance partner with Katten Muchin Rosenman LLP, focuses his practice on counseling hedge and private equity fund managers and other investment advisers on operational, regulatory and compliance issues. He regularly addresses Financial Conduct Authority (FCA) and EU authorization and compliance under both the EU Alternative Investment Fund Managers Directive (AIFM Directive) and MiFID, cross-border issues in the financial services sector, market abuse, anti-money laundering and regulatory capital requirements, formations and buyouts of...

44-0-20-7776-7666
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