FCA issues alert: Guard against OCGs exploiting equity markets through suspicious trading for enhanced market integrity protection.”
FCA issues alert: Guard against OCGs exploiting equity markets through suspicious trading for enhanced market integrity protection.”
FCA alert to OCGs trading, urging vigilance against organized crime groups infiltrating equity markets, risking global market integrity. The report sheds light on the disturbing tactics OCG members employed, focusing on trading activities linked to UK and internationally listed equities. Moreover, These activities constitute a substantial portion of observed suspicious trading volumes in equity markets, threatening the financial system’s integrity.
According to the Serious Crime Act 2015, OCGs consist of three or more individuals collaborating to carry out criminal activities. The FCA report highlights key indicators of OCG exploitation, including a pattern of trading before merger and acquisition (M&A) announcements, recruitment of inside information sources, and the use of intermediaries to broker such information. OCGs often exploit overseas broking firms with lax standards and engage facilitators, including employees of authorized firms, to open accounts with these entities.
The report underscores the urgency for financial firms to be vigilant and take proactive measures to mitigate the risks associated with facilitating illicit activities. Firms are urged to familiarize themselves with regulatory obligations to counter the risk of being used to further financial crime.
Key indicators signalling potential involvement in insider dealing by OCGs include clients consistently generating Suspicious Transaction and Order Reports, trading activities preceding M&A announcements, and clients trading in the same security for the first time.
Companies should guard against OCG exploitation by communicating a zero-tolerance approach to market abuse, requesting evidence, and treating suspicious trades.
Encourage advisory firms to caution staff against disclosing inside information to OCGs and limit references on social media. Lastly, The FCA’s report emphasizes the importance of maintaining market integrity and urges collective efforts to combat premeditated market abuse.
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