FCA Fines And Prohibits Hedge Fund Chief Investment Officer For Market Abuse: Comments By Nick Bayley, Managing Director, Head Of UK Regulatory Consulting, Duff & Phelps

Nick Bayley, Managing Director, Head of UK Regulatory Consulting of Duff & Phelps comments:

“This is FCA’s very first market abuse outcome under the EU Market Abuse Regulation, which went live in July 2016.  We can see from its Annual Report that the regulator had 29 market manipulation cases open as at 31 March this year, so hopefully other outcomes will follow quickly in its wake.

“In terms of new lessons from this case, there are relatively few.  Layering and spoofing like this has been around a long time and is probably the most regularly sanctioned form of market manipulation around the globe, with the CFTC in particular producing numerous outcome very similar to this.

“It’s interesting to speculate whether the role of the unnamed DMA provider has also been scrutinised by the FCA.  Although the primary responsibility to prevent and detect manipulative strategies sits with the buy-side firm itself, the DMA provider would also have had sufficient information to identify the manipulative trading by its client.”