30 January 2019

Financial crime update: market abuse, ‘flying’ and ‘printing’

The FCA published useful reminders for firms about expected and required practice on market abuse regulations, 'flying prices' and 'printing trades'

Market Abuse Regulation

The FCA has recently been reviewing the implementation of the Market Abuse Regulation (MAR) and have published some useful reminders for firms about expected and required practice.

The FCA expects all market participants to remain vigilant and to be proactive in preventing and responding to market abuse. Confidence in the integrity of markets is a key foundation of markets working well and market abuse erodes this trust. It increases the costs of trading and distorts the playing field, undermining fair competition and reducing confidence in UK securities.

Firms should not rely on “out of the box” market abuse surveillance systems and while systems are a useful tool, they rely on the lists of manipulative behaviours set out in MAR which is not exhaustive. There is therefore a risk that reliance solely on these systems means that market abuse behaviours could be missed. Firms must exercise their own judgement when assessing market behaviours and take into account the specific characteristics of the financial instruments and markets they are operating in.

Complying with MAR is more than adhering to a set of prescriptive requirements. The FCA states that the most effective compliance is where participants could demonstrate that their risk assessments were calibrated to the markets and asset classes they operate in, and that their approach was responsive to changes in their business, markets and regulatory environment.

Problem areas

The FCA states that firms are struggling to comply with their obligation to implement surveillance of all orders and transactions. When MAR came into force, the FCA recognised that this would require additional technology which would take time to design and implement however now 2 years into the regime, firms are expected to be fully compliant.

Additionally suspicious transaction and order reports (STORs) remain inconsistent across asset classes and are particularly low in some areas e.g. fixed income and commodities.

“Flying prices” and “printing trades” – what are they?

’Flying’ involves a firm communicating to its clients, or other market participants, via screen, instant message, voice or other method, that it has bids or offers when they are not supported by, or sometimes not even derived from, an order or a trader’s actual instruction.

’Printing’ involves communicating, by one of the above methods, that a trade has been executed at a specified price and/or size, when no such trade has taken place.

If false prices and/or trading activity are advertised to the market, then there is a risk that trading decisions may be made based on misleading information. This could cause market participants financial harm, and would undermine the integrity of the market.

The FCA believes that these practices may amount to criminal offences and/or market abuse and/or unacceptable market conduct in breach of its Principles for Business.


The FCA’s consistent message is that firms should not rely on standardised policies, procedures or controls and that firms’ ensure market facing staff have appropriate and sufficient training as well as the firm having sufficient oversight of their activities.