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Markets only work if people believe the game isn’t rigged. If share prices are being nudged up by whispers in the pub or knocked down by spoof trades in New York, trust crumbles. And that’s where the UK market abuse regime comes into play – a bundle of rules that basically say, “Play fair, or the FCA will make your life miserable.”
It’s not just companies that need to watch themselves – investors, brokers, advisers, and even the loose lipped friend who “accidentally” leaks a takeover tip are on the hook too. And because these rules overlap with criminal law, the consequences can stretch from a fine that’s barely more than a slap on the wrist to time behind bars. So, what exactly are these rules, and who must follow them?
Every good drama needs a rulebook, and for UK markets that’s the Market Abuse Regulation (UK MAR). We carried it over from the European framework at Brexit and decided to keep it – because running markets without a rulebook isn’t much fun. But unlike a code of conduct or “best practice” manual, MAR isn’t optional – it has the force of Law. If it applies to you, you’re bound, whether you like it or not.
Keeping it company is the Financial Services and Markets Act 2000 (FSMA). If MAR sets the rules of the game, FSMA is the one with the red card tucked in its pocket. Together, MAR and FSMA give the FCA a full range of responses, from a quiet word in your ear to full-blown enforcement action.
The answer is pretty much anyone dealing in instruments tied to UK markets. Shares on the London Stock Exchange are included, as are securities traded on other platforms like multilateral trading facilities (MTFs) and organised trading facilities (OTFs). These may sound like obscure indie bands, but they’re essentially the marketplaces where trading happens. Even derivatives linked to those instruments are included.
And don’t assume geography gets you off the hook either. The rules follow the instrument, not your postcode. If it trades in London, a suspicious deal in New York, Singapore or Dubai can still fall under UK MAR. The FCA’s reach is deliberately long, stretching well beyond the Square Mile.
Which brings us to the three big “don’ts”. Insider dealing, unlawful disclosure, and market manipulation are the headline acts – the behaviours most likely to wreck confidence in the market. The gist is this: don’t trade on secrets, don’t pass them around, and don’t fiddle with prices to create an illusion of demand.
This is the big one – the offence most people think about when they hear “market abuse”. It’s when someone in possession of inside information decides to use it for trading or slips it to someone else who does.
Inside information has a precise legal definition: it must be specific, not public, relate to an issuer or its securities, and be the kind of detail that would move the price if it came out. In plainer terms: exactly the sort of tempting knowledge you’d trade on – if only the law didn’t call that a crime.
Insiders aren’t just company directors. Employees, advisers, accountants, even the relative who gets a whispered tip at Sunday lunch – all of them are caught by the rules. Handing it on doesn’t reduce liability; it just makes the circle of blame bigger.
Take an example: a finance director knows a profit warning is about to drop. They sell their shares before the announcement – classic insider dealing right there. If they were to tip off their brother and he sells, that’s also insider dealing, and now there are two people waiting for a knock at the door.
To be blunt: trade on inside information and you don’t just risk embarrassment – you risk your job, your reputation, and your freedom.
Sometimes the problem isn’t dealing – it’s talking. Simply passing inside information to someone else can itself be market abuse – unless it’s done in the proper course of your job.
There are good reasons to share sensitive information. A company might give details to its lawyers or accountants so they can do their job, provided confidentiality is kept tight. But passing a hot tip to a mate over a pint, or hinting about a takeover at the golf club? That’s unlawful disclosure.
And the liability doesn’t stop there. If an executive casually reveals to a friend that a takeover bid is imminent, the disclosure is unlawful even if the executive never trades a single share. If the friend then acts on it, both are in trouble – the friend for insider dealing, the executive for the unlawful disclosure.
The law is designed to stamp out “tipping off” and casual leaks that give some people an unfair advantage. Think of it this way: if you wouldn’t be happy seeing your conversation plastered across the financial pages tomorrow morning, best not to have it. After all, loose lips don’t just sink ships – they sink careers too.
If insider dealing is about trading on secrets, market manipulation is about stage-managing the market, so it looks busier, stronger, or weaker than it really is. It’s behaviour that gives a false impression of supply, demand or price, or that nudges prices away from where they’d naturally be.
That can mean placing orders you never intend to fill (spoofing), buying and selling just to fake a buzz of activity (wash trades), or spreading rumours dressed up as fact. Benchmarks can be fiddled with too, and even clever algorithmic tricks fall foul if the aim is to mislead.
The takeaway is clear: market prices should show real demand and supply, not a performance staged for profit. Trust depends on that clarity.
The regime isn’t only about catching cheats – it also expects companies to play their part openly. If an issuer has inside information that directly concerns it, the rule of thumb is clear cut: announce it to the market, and quickly.
In rare situations disclosure can be delayed if going public straight away would genuinely harm the company’s interests; provided confidentiality is watertight and the market isn’t misled. But that’s the exception, not the norm. If in doubt, get it out.
And to keep track of who knows what, issuers must also maintain insider lists – detailed records of everyone with access to inside information. These lists aren’t box ticking exercises; they’re the FCA’s trail when something leaks, and they need to be accurate, up to date and ready to hand over on request.
On top of that, senior managers and other “persons discharging managerial responsibilities” (PDMRs) face their own set of restrictions. They’re banned from trading during “closed periods” – usually the 30 days before financial results are announced, otherwise known as the corporate version of dry January. And once their trades pass a modest threshold, those dealings must be reported both to the company and to the FCA. The point is to reassure investors that insiders aren’t quietly lining their own pockets while the rest of the market waits for news.
Catching market abuse isn’t a side hustle for the FCA – it’s their day-to-day business. The regulator keeps watch over trading across UK markets with surveillance systems sharp enough to spot patterns most humans would miss. And it doesn’t just rely on its own kit: firms are expected to file Suspicious Transaction and Order Reports (STORs) whenever they sniff out dodgy behaviour.
If something looks off, the FCA has plenty of tools to turn up the heat. It can demand documents, call individuals in for interviews, and – if things get serious – arrive at offices with a warrant. When the FCA knocks, you open the door – end of story.
As for sanctions, the menu ranges from unlimited fines and public shaming through to stripping firms of their authorisation or banning individuals from the industry altogether. And for the most serious cases, there’s always the option of handing matters over for criminal prosecution – which means fines and the possibility of spending time at His Majesty’s pleasure.
The FCA wants penalties that sting more than the temptation to cheat, and it isn’t shy about using them.
The FCA doesn’t just punish bad behaviour after the fact – it expects firms to put proper systems in place to stop it happening in the first place. That means trade surveillance strong enough to spot unusual patterns, clear written policies on handling inside information, and insider lists that are accurate and up to date. Training staff so they understand the rules is part of the deal too.
Boards and senior management are meant to set the tone from the top. A firm that treats compliance as a box-ticking exercise is already on the wrong side of the regulator’s expectations. In fact, even if no market abuse occurs, the FCA can still act if it thinks systems and controls are weak.
Good compliance isn’t optional. A culture that values transparency and discipline is as important as the technology or paperwork behind it. Firms that ignore that message may find themselves in trouble – not because abuse has happened, but because the safeguards weren’t there to stop it.
The UK’s market abuse regime is deliberately tough. It stretches across borders, covers a wide cast of characters, and combines regulatory and criminal measures to keep markets fair. Issuers, investors, advisers – nobody gets a free pass.
At the risk of repeating ourselves: compliance isn’t a side task. It’s central to how the City keeps its credibility. The rules are there to protect market trust – and market trust is what keeps the whole show on the road. Break them, and you’re not just risking punishment; you’re gambling with the confidence the system depends on.
So, the message is clear enough: trade fairly, disclose properly, and keep market abuse out of the pub chat.
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