Following the FCA’s warning that Brexit could cause a surge in market abuse as regulatory surveillance declines, a leading fintech executive has suggested that the problem extends outside UK borders.
Julia Hoggett, the FCA’s director of market oversight, warned in a speech this week that surveillance might become ‘patchier’ in the aftermath of the financial sector shifting business to the EU. She advised banks and investment funds to be more sceptical of employees who access confidential information, and spoke of a threat to ‘market cleanliness’ if City corporates can’t ‘knit back together’ regulatory caution after the UK’s departure.
Now Juan Diego Martin at ML specialist Fonetic has argued that an even wider threat is posed extending to other countries. If Britain’s market shrinks, he said, the regulatory spotlight could fall on countries like Germany and the Netherlands.
“Brexit could certainly pose a threat to the UK market if wayward traders decide to use any fragmentation in oversight after March 29 to access confidential information,” he said. “However, the implications of this event range beyond the UK. In the event a no-deal, it could lead to a reduction in size of the UK market, lending weight to other countries like Germany or the Netherlands. While regulators in these countries have previously been more relaxed than the FCA due to the size of their market, a shift in the balance could throw a spanner in the works. As these markets grow, we could start to see increased regulatory pressure on businesses operating in these regions.”

by Guy Matthews