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Carney’s speech on market abuse rules extension marks a new era for the fund management sector.

June 15, 2015 - Regulatory Updates

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As reported by FT on June 15, 2015 in the article “Bank of England Governor Mark Carney to extend market abuse rules.”: "A punitive regime that holds senior managers to account for failings on their watch will be extended beyond banking and insurance to thousands of asset managers, hedge funds and other bank customers in the fixed income, commodity and currency markets."

He announced “an end to “the age of irresponsibility” and ethical drift”, with the introduction of tougher criminal sanctions for market abuse that will be extended to parts of the financial system that had been left alone until now.

The plan outlining 21 recommendations includes the creation of new laws on civil and criminal abuse and the extension of criminal penalties to 10 years in prison for crimes related to market abuse.

The proposed Seniors Manager Regime (SME) for bank managers and insurers will now be extended to fund managers, hedge funds and brokers, who will now be held personally accountable for ensuring comprehensive training and qualifications for staff. Firms should also ensure that adequate systems are in place and the tone should be set from the top as summed by Mark Carney: “The FCA should oversee compliance, redeploying resources to focus on Senior Persons. In turn, these individuals would be on the hook for promoting compliance within their organisations.'”

That will put even more pressure on companies to set up proper risk management, governance and compliance structures and will make senior management more accountable in front of the regulators. In order to avoid big investments to provide higher level of internal controls, financial companies can employ external compliance experts, who can do thorough review of existing processes and policies, and based on the outcomes, draft and implement effective new framework ensuring that all the regulatory requirements are met. An external provider will offer high level of impartial and professional solutions, helping companies to reduce risks but also time and costs.

In anticipation of these changes Lawson Conner has developed a range of solutions to help fund managers meet their regulatory obligations and increase the level of transparency, and governance standards. We manage the entire process from initial assessment to designing policies and procedures, monitoring of key business processes and training staff to be up-to-date with current compliance requirements. Our solutions reduce risk on a corporate and individual level and minimise compliance and regulatory issues in a more and more complex regulatory landscape.

All in all, Carney’s speech will have a significant impact on financial companies and marks a new era of even higher level of regulatory responsibilities for all market players.

For more information about Carney’s speech go to FT.com and check Lawson Conner’s regulatory updates.



Andrew Frost
Director, Investment Management Services

E: afrost@lawsonconner.com


Joe Woodbury
Director, Investment Management Services

E: jwoodbury@lawsonconner.com