UK FCA Market Watch 85—market conduct and transaction reporting issues

The UK Financial Conduct Authority (FCA) has published Market Watch 85, setting out how the information‑sharing provisions in the Economic Crime and Corporate Transparency Act 2023 (ECCTA) can be used by firms to prevent, detect and investigate economic crime, including criminal market abuse. The FCA explains that ECCTA allows in-scope firms to share customer or former customer information with other firms directly where specified "warning" or "request" conditions are met, while providing protection from breaches of confidentiality and civil liability, subject to continued compliance with data protection requirements. The warning condition applies where a firm has taken (or would have taken) safeguarding action, such as terminating or restricting the service provided to a customer, due to suspected criminal market manipulation. The request condition applies where a firm has requested information from another firm, which it reasonably believes holds information that may assist it in taking "relevant action", including preventing, detecting or investigating economic crime.

The newsletter highlights that ECCTA currently applies to certain market manipulation offences under the Financial Services Act 2012, but does not extend to insider dealing and notes that a Home Office call for evidence is considering whether the regime should be expanded to cover other offences. The FCA states that firms have a responsibility to counter the risk of economic crime and should assess the risks of clients using them for criminal market abuse. Therefore, it encourages firms to consider: (i) how the direct information-sharing measures under ECCTA apply to their own business; and (ii) when it would be appropriate to share information to counter the risks of economic crime. The FCA also clarifies that the ECCTA regime does not replace firms' obligations to submit suspicious activity reports or suspicious transaction and order reports, nor does it make information sharing a prerequisite for doing so. While the FCA will engage with firms on how they are using the ECCTA regime, firms are also encouraged to share emerging market abuse patterns or typologies with each other more broadly, beyond the scope of the regime.

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