Finma CEO terms market integrity “a strategic priority”
Speaking at the annual press conference of Swiss financial market regulator Finma, CEO Mark Branson (pictured) has highlighted the importance of market integrity for the Swiss financial landscape.
Market integrity is one of the four issues Finma focuses on alongside conduct in cross-border business, the fight against money laundering, and correct conduct at the point of sale.
“I would like to say straight away that market conduct in Switzerland seems to us largely correct. But there are still cases – in fact a growing number of them – that end up in our net. It is difficult to say whether this is the result of better detection or a changing behaviour of market participants,” Branson said.
Finma’s CEO explained that at the moment data provided by Swiss stock exchange surveillance units only highlights securities dealers that have traded a certain volume of a particular security but changes will be further implemented, probably as from January 2018.
The identity of the beneficial owner will be reported automatically whereas it is not possible today for Finma to know the identity of individuals behind a transaction.
“This will significantly enhance the quality of the suspicious activity reports submitted by surveillance units. Finma will be able, essentially at the push of a button, to analyse the trading behaviour of individuals and companies, and determine whether they are using manipulative strategies. Plainly, this is bad news for those who do not abide by the rules,” argued Branson.
The Swiss financial market watchdog has investigated hundreds of reports of market abuse in 2016, of which around 60% were reported by Swiss stock exchange surveillance units, a further 20% by foreign authorities, and the remainder has come from our in-house specialists and market whistleblowers.
In 2016, Finma analysed around seven million transactions executed at irregular time intervals or in unusual market conditions.
“In around 600,000 cases, we could identify the beneficial owners, the clients and the circumstances surrounding the order and its execution. In some instances relating to 500 of those transactions, we obtained extensive information from supervised institutions,” explained Finma’s CEO.
Branson added the regulator is currently working on a number of cases of possible market abuse in Switzerland, including reports of insider trading at several listed companies.
Cases of “wash sales” and “spoofing” in which large-scale fake orders are placed and withdrawn with the aim of achieving an unfair advantage are being investigated.
For more efficiency in market supervision, Finma’s CEO mentionned that another step would be the introduction of comprehensive reporting requirements for securities dealers.
“In Europe, banks and securities dealers have to report suspicious transactions in line with the STR requirements. This is not the case in Switzerland. Every year, the competent supervisory authority in England receives around 2,000 of these reports. Experience shows that reports of this kind are the best source of high-quality information,” said Branson.
He concluded : “Big data does not forget, and that helps us. Market participants should know that market supervision remains a key strategic priority for Finma.”