Liontrust Asset Management has become the first firm to take advantage of Bovill’s innovative Market Abuse Surveillance Managed Service. Developed in collaboration with KRM22, a market-leading provider of flexible monitoring software for detecting market abuse, the service combines technology with in-depth compliance expertise to provide a cost effective and robust solution to remaining compliant with Market Abuse regulation (MAR).
Market abuse surveillance is an ongoing challenge for firms. The pandemic and a prevalent culture of remote working has engendered new and unique difficulties with monitoring market abuse, particularly insider trading. According to research by Bovill, 37% of firms are not sure or not confident that their market abuse risk assessment can stand up to scrutiny by the Financial Conduct Authority (FCA). Conversely, only 8% of those polled said they were “very confident” that their risk assessment would meet the standards demanded by the regulator.
Bovill’s poll also found that 41% of firms have not submitted any Suspicious Transaction & Order Reports (STORs) – the FCA’s formal report on suspicious orders or transactions that could constitute insider dealing – in the last 12 months. Another indication of firms’ uncertainty about their processes and understanding of the risks.
Bovill originally developed the concept of a managed service for market abuse alongside a working group of clients. Where larger institutions have used technology to identify suspected abuse for some years, many firms have not had the resources to implement this kind of ‘RegTech’ solution or manage the outputs. This is one of several Bovill technology partnerships designed to combine compliance advice with technology in a more cost-effective way.
With increasing evidence that the FCA is identifying and pursuing potential market abuse breaches using their own technology, more firms are looking to upgrade their surveillance controls to pre-empt issues.
Damon Batten, Capital Markets Practice Lead at Bovill, said:
“Expectations around market abuse controls, both from the regulator and from the industry, are on the rise. Despite this, our polling shows that firms are not confident in their market abuse risk assessments, and that the level of firms not currently submitting STORs remains stubbornly high.
“Almost all large firms are now using an IT solution for monitoring market abuse – whether they’re building their own tools or buying off-the-shelf. But from talking to clients we’re finding that this kind of product is often very expensive, while relying on manual monitoring means they’re exposed to an ongoing compliance risk. Using a trusted third party adds independent credibility and assurance both to the client, their business partners, and the regulator.
“We’re delighted to be supporting Liontrust with their market abuse surveillance and look forward to a successful partnership where we can develop the service further.”
Daniel Langley, Head of Compliance at KRM22 said:
“It’s great to have Liontrust onboard and we look forward to many more firms joining this innovative service over time. We partnered with Bovill because of their expertise and long track record in managing market abuse risk, and it was great that they were able to work closely with clients to understand what kind of proposition the market needed. We believe our joint offering will help smaller firms to significantly enhance their market abuse surveillance capability, in a cost-effective way.”
Milly Porter, Deputy Head of Compliance at Liontrust said:
“Our collaboration with Bovill and KRM22 gives us the confidence we needed that our market abuse surveillance is on a strong footing. Outsourcing this element of our surveillance gives us access to market leading technology, as well the specialist resource we need to ensure surveillance is effective. The innovative technology combined with in-depth compliance expertise is the perfect combination.”