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FCA warns alternatives firms over systems shortfalls

Regulations digitalThe UK’s financial watchdog has issued a dear CEO letter to alternative investment managers highlighting the need for proper systems to manage market abuse.

The letter from the Financial Conduct Authority (FCA) sets out its supervisory strategy for the alternatives market and touches on the importance of culture, product governance, conflicts of interest and market integrity.

But its strongest sentiments concern the measures taken to mitigate market abuse.

“We expect firms to have strong prevention cultures and effective systems and controls to enable them to discharge their obligations under the UK Market Abuse Regulation,” states the letter written by Nike Trost, head of asset management and pensions policy at the FCA.

It states that firms must ensure that controls should be tailored to individual business models, and failure to comply could be met with civil, supervisory or criminal sanctions.

According to Charles Proctor, a regulatory partner at law firm Fladgate, the letter is a “wide-ranging shot across the bows” of alternative firms that should prompt a review of their systems.

“Authorised firms within this category should expect follow-up from the FCA, and should therefore now be considering a review of their systems and controls in these areas,” said Proctor.

©2022 fundsTech

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