FCA rears its head on insider trading after 5 years of silence

The FCA has noticed a spike in buying activity of shares in companies that are about to conduct a major deal, therefore has launched an inquiry into insider trading.


Britain’s Financial Conduct Authority (FCA) may well be one of the world’s most highly respected regulatory authorities when it comes to protecting the interests of customers of electronic trading companies, as well as one of the most forward thinking in terms of keeping pace with new developments in the financial sector by way of providing a framework to stimulate innovation in the form of its FinTech sandbox.

More traditional forms of trading involving more traditional asset classes, however, have gone by the wayside slightly over recent times, however, with the means by which company stock is traded having been a silent point for five years.

Insider trading – the practice of trading company stock whilst armed with knowledge from inside the company that other traders are not party to, is illegal in most jurisdictions and often punishable by criminal trial, however in Britain, the FCA has not brought any insider trading cases to court since 2011.

This week, the sleeping giant has woken from its 5 year slumber and has begun an investigation into what it considers to be inside traders targeting new companies that have floated stock on London’s exchanges post IPO.

This investigation was brought about as a result of a sudden spike in the price of shares of newly floated companies just before events such as mergers and acquisitions took place involving companies whose stock was present in this spike.

Whilst very hard to prove, largely due to the common practice of traders seeking to execute deals on stock with regard to which they have inside knowledge asking acquaintances that are outside the firm to conduct the trading based on information passed to them, thus covering their tracks, investigations into sudden patterns such as this can sometimes be fruitful even if very complex.

Indeed, in some cases, even courts are unable to determine the root cause, resulting in very high costs and long, drawn out trials.

In this particular case, the FCA has noted that companies that were involved in 19% of all mergers and acquisitions have been subject to suspicious buying activity before official announcements were made, which is a 14% increase since 2014.

The FCA maintains that whilst no censuring of insider deals has taken place since 2011, the regulator has been training companies to spot unusual trades and also encourages brokerages to submit suspicious transaction reports when they see signs of market abuse, thus placing the onus on companies in the way that a self-regulatory organization may do.

Britain remains a transparent market, despite its sheer volume and size, and indeed actions such as this by the FCA are vital in order not just to preserve its reputation as a first class regulator, but also to preserve that of London’s prestigious venues.

Read this next

Digital Assets

BlackRock digs further into crypto with metaverse ETF

BlackRock, the world’s largest asset manager with almost $10 trillion in AUM, is set to launch a new metaverse ETF to help investors securely monetize on the booming immersive version of the internet.

Digital Assets

Binance wins license in New Zealand as rival Huobi shutters derivatives

Binance, the world’s largest crypto exchange by traded volume, has obtained licenses to operate in New Zealand, even after rival Huobi shutdown derivatives trading last month due to concerns about regulations.

Retail FX

Hong Kong busts perpetrators of ‘ramp and dump’ scam

Hong Kong’s financial watchdog, the Securities and Futures Commission (SFC), has charged thirteen suspects of market manipulation in a joint operation with the local police.

Institutional FX

TradingView integrates market data from German Tradegate exchange

TradingView announced that it ‎has increased data coverage to allow its users to receive information from ‎and get free access to the intra-day and tick data from Tradegate Exchange.

Retail FX

Spotware Systems introduces Custom Push Notifications for cTrader mobile apps

Spotware Systems, a technology provider for the electronic trading industry, is introducing a new push notification feature to alert mobile users of price swings and market fluctuations through their cTrader app.

Market News

The Week Ahead: 30 September from David Madden, Market Analyst at Equiti Group

Sterling dominated the headlines last week, as there were concerns the UK government might struggle to service its debt.

Inside View

How does the quality of signal providers affect your business?

A must-have onboarding process for brokers with investment services like PAMM, MAM, or copy trading


DBS deploys Nasdaq Trade Surveillance

“The confidence that markets and our clients have in DBS as a safe and trusted banking group is anchored on our ability to detect and respond to anomalous activity, which in turn calls for a robust surveillance and prevention infrastructure.”

Industry News

SEC charges Justin Costello and David Ferraro for securities fraud and posing as billionaire veteran

The Securities and Exchange Commission charged Cannabis executive Justin Costello and David Ferraro, an associate of Costello’s, for promoting the stock of several microcap companies on social media without disclosing their own simultaneous stock sales as market prices rose.