Even when no changes are deemed necessary, these assessments should be reviewed on a consistent basis.
These should take into account not only potential changes to business structures, practices or strategies, but also general market developments and enhancements to an overall monitoring and surveillance programme.
Firms are also increasingly turning to artificial intelligence to bolster their risk management process, whether to enhance predictive analytics to detect potential market manipulation and insider trading activities, or even streamline reporting mechanisms.
This strategic integration of AI within financial systems signifies a broader industry trend, with the FCA also having begun integrating AI into its own surveillance approach.
It is clear then that the FCA expects firms under their supervision to employ a broad overview of potential market abuse.
Firms can better understand risk areas by keeping a comprehensive and up-to-date check on any possible signs of market abuse, refreshing these insights regularly, and utilising comprehensive data analysis.
As the methods and individuals involved in market abuse evolve, moving away from their traditional roots to adopt more sophisticated techniques, firms must adapt swiftly to stay one step ahead.
Failure to do so not only exposes the firm to significant financial and reputational risks but also to the wrath of an increasingly aggressive regulator.
Andrew Poole is a director in the financial services compliance and regulation practice at Kroll
