FSA crackdown on monitoring suspicious trades

THE City watchdog is preparing to launch spot checks on firms’ reporting of “suspicious trades”, according to the man charged by the Financial Services Authority (FSA) with investigating rule breaking.

Patrick Spens, head of the FSA’s market monitoring department, revealed that his team will visit about a dozen of the 500 banks and brokers who process the vast majority of millions of transactions that pass through the UK each day.

Spens has already written to firms that have made fewer suspicious transaction reports (STRs) than others and has requested a description of last three cases they considered reporting to the FSA but decided not to.

The rest of the industry is set to receive a letter from the FSA department explaining the new measures to improve market monitoring.

More than 2,000 UK firms are required to report suspicious trades as part of the UK’s effort to prevent insider dealing and market abuse.

Spens said: “We are putting a renewed focus on the supervision of the STR regime and we will be doing spot checks. I think we’re going to visit 12 firms, a cross-section of all the firms that report to us.”

The 55-strong team in the market monitoring department carries out preliminary investigations before passing them on to prosecutors for either criminal or civil action. About 10 per cent of cases result in firms or individuals being issued with private warnings about their behaviour.

Spens warned: “The world has changed. We’ve got better at our job. We are taking on more complex cases.”

PETER RANSCOMBE