The Financial Services Authority (FSA) has said it plans more education of firms and invention to curb market abuse on the ‘front line' of financial services.
Speaking at an event in London, Patrick Spens, head of market monitoring at the FSA, which will become part of the Financial Conduct Authority (FCA), said the regulator expects firms to perform surveillance in as close to real time as possible to monitor orders and transactions.
The warning was directed at trading platforms and investment firms, however the FSA has written to all firms which have the permission ‘arranging deals in investments' to remind them of their obligations under the Suspicious Transaction Report (STR) regime.
Spens said some of the responses it received as part of its STR work highlighted the need for the regulator to continue ‘an educational agenda'.
From a firm offering life insurance, one of the responses was ‘for us a suspicious transaction would be if someone took out a policy on someone else and then shot them dead, we'd certainly report that'.
Other responses from the firm revealed that it was not even aware of what STR stood for.
Spens said the FSA relies on firms submitting good quality STRs in order to deliver its market abuse agenda.
The FSA may seek to visit any regulated firm to help assess the adequacy of the systems and controls in place to comply with both the European Securities and Markets Authority (ESMA) guidelines and UK regulation, Spens said.
As the regulator moves to more thematic-based supervision, visits of this nature will become a common feature, he added, saying that some visits may be announced swoops "intended to encourage firms to comply with the requirements and standards under the regulatory system at all times".
"My message to you is that we are the final line of defence, you are the front line and we are in this together", Spens said.
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