The United Kingdom (UK) Financial Conduct Authority (FCA) in its recently published Market Watch 79 has put the spotlight on market abuse surveillance and data governance.

In its 2022-2025 strategy published earlier, the FCA had promised to go tougher on firms operating in the UK.

In its recent release, the regulator highlights the failures of market abuse surveillance caused by issues with data and automated alert logic.

The FCA also discusses its recent peer review of firms’ testing of front-running surveillance models.

It reiterates that under the Market Abuse Regulation (UK MAR), firms must identify and report instances of potential market abuse.

To this end, the regulator wants firms to put in place effective arrangements, systems and procedures that are appropriate and proportionate to the scale, size and nature of their business activities.

Where UK MAR refers to firms’ systems, arrangements and procedures for market monitoring and surveillance, this includes how firms govern, implement, test, review and rectify issues with the functioning of the technical systems that they use to deliver market monitoring and surveillance arrangements.

This applies to all firms, whether they have their proprietary in-house market abuse surveillance alert systems or rely on third-party systems.

The FCA believes either could be susceptible to malfunction and not fit for purpose.