Skilled Person
Lot F - Market Abuse
Market abuse undermines market integrity, investor confidence and the fair and orderly functioning of financial markets.
The FCA will move to a Skilled Person review under Lot F where the outcomes of supervisory work or transaction reports made by the firm indicate an unacceptable level of market abuse risk A review may consider all or some aspects of a firm’s market abuse framework, including insider dealing, unlawful disclosure of inside information, market manipulation, conflicts of interest, personal account dealing, surveillance arrangements and compliance with the Market Abuse Regulation (MAR).
The Skilled Person review will assess the adequacy of a firm’s systems and controls and the associated governance arrangements for preventing, detecting and escalating market abuse risks. The review will focus on areas of heightened market abuse exposure relevant to the firm’s business model and activities and will typically include document and record reviews, as well as interviews with key members of staff, including senior management.
“Cleaner markets instil confidence, which encourages investment into our markets, which encourages growth and innovation. It’s a virtuous cycle. Our strategic focus market abuse is not just words on paper.”
— Therese Chambers, Joint Executive Director of Enforcement and Market Oversight, FCA
Considerations for firms
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Governance and culture
An effective market abuse framework starts with clear governance and a strong culture of integrity. Accountability for market abuse risk must be clearly defined, with senior management actively engaged in setting expectations, providing oversight and challenging outcomes. Firms should be able to evidence how market abuse risks are owned, monitored and escalated across the business.
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Risk assessment and business model alignment
A firm’s market abuse risk assessment should be firmly grounded in its business model, trading activities, client base and product set. It should identify where the risk of insider dealing, information misuse or market manipulation is most acute and drive proportionate controls and surveillance. A static, compliance‑driven assessment is unlikely to remain effective as the business evolves.
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Inside information controls
Firms must be able to identify inside information promptly and manage it effectively throughout its lifecycle. This includes controls around information barriers, wall crossings, insider lists and interactions with clients and counterparties. Weaknesses in how inside information is identified or handled are a common root cause of market abuse failings.
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Surveillance effectiveness
Market abuse surveillance arrangements should be risk‑based, well calibrated and demonstrably effective. Firms need confidence that relevant activity is being captured, alerts are meaningful and scenarios reflect real risks rather than theoretical coverage. Ongoing tuning, testing and oversight are essential to ensure surveillance keeps pace with changes in trading behaviour and market conditions.
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Personal account dealing and conflicts
Controls over personal account dealing and conflicts of interest play a key role in managing market abuse risk. Firms should ensure policies are clear, approvals are robust and monitoring is effective, particularly for higher‑risk staff. Conflicts must be identified early and managed actively to prevent misuse of information or inappropriate market behaviour.
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Escalation and regulatory reporting
An effective framework supports timely escalation, investigation and decision‑making when potential market abuse issues arise. Firms should have clear processes for assessing alerts, documenting outcomes and determining when regulatory reporting is required. Prompt, well‑reasoned responses are critical to managing risk and meeting regulatory expectations.