Market Fixing Scandals: FCA Reveals Surge in Suspicious Trade Reports

The Financial Conduct Authority has received a surge in suspicious trade reports following the raft of market fixing scandals that have rocked the industry over the last two years.

According to a Freedom of Information request, confirmed by the FCA, the regulator received 117 notifications over potentially suspicious trades that allegedly indicate market manipulation across a number of sectors, including energy, minerals and financial securities.

The number of reports accounts for a 43% surge year-on-year.

The Suspicious Transaction Reports (STR) have increased to more than 1,000, up from 739 in the last equivalent annual period and are related to"the misuse of information", or insider dealing.

"The FCA has been working with the industry over the past 18 months to improve the standard of market surveillance undertaken by authorised firms, with a particular focus on increasing the scope of products and behaviours covered," said the FCA in a statement to IBTimes UK.

"This, alongside recent actions in relation to market manipulation, such as Swift Trade, Samuel Kahn and Rameshkumar Goenka, have helped firms better understand the types of behaviour we consider manipulative and therefore expect to be reported as an STR.

"We also recognise that Libor fines and the misconduct that occurred may have indirectly contributed to the increased number of STRs received."

However, the FCA was keen to point out that the increase in suspicious transactions was not necessarily a sign of increased wrongdoing. A greater increase in reports can signal that there is a better understanding by traders of their need to be vigilant about their activities, it added.

Price Fixing Scandals

The FCA took over from the Financial Services Authority in April this year and has worked with regulators around the world to clamp down on a number of market rigging offences.

Over the last year, the Royal Bank of Scotland (RBS), Icap, and Dutch lender Rabobank has settled with a raft of authorities, including the FCA, over Libor fixing charges.

It is also tipped to end its investigation into allegations of foreign exchange market fixing shortly and has pledged in the past to install new regulatory measures, depending on the outcome.

In November, the FCA and energy regulator Ofgem concluded an investigation that found traders had not rigged or manipulated Europe's largest gas market, worth £300bn (€361bn, $481bn).

They started the probe in September 2011 after a whistle blower Seth Freedman who worked for the ICIS Heren, suggested that there could be suspicious trade activities going on.

However, the FCA and a number of other authorities are still allegedly looking into price fixing in the oil markets.