A report today on esteemed financial wire Bloomberg is headlined thus: “London’s lockdown led to a plunge in tips to Britain’s market watchdog.”
Bloomy tells us that with traders working from him, reports of suspicious activity and possible market abuse fell dramatically in April. It quotes a consultant arguing that usual controls “may have weakened”.
It’s good work, but I suspect it is the very opposite of what is actually occurring.
Perhaps the reason there are fewer reports of market abuse is because there is less market abuse.
For one thing, City traders are not meeting in shady bars to swap gossip. The old ruse - if we all do this trade at the same time, no one can say we were insiders - requires a conspiracy that doesn’t have a paper trail. It requires a meeting in a pub.
Moreover, I think the fear of losing one’s job drives good behaviour. Your colleagues would think you simply insane if you hatched a plan to, say, manipulate the oil price from a spare bedroom in Finsbury Park. (It’s been done.)
And the FCA’s online monitoring system is some serious kit. It can see what you are doing whether you are in the office or not.
So the traders are trying to stay employed by not doing anything stupid. And the regulators are keen to earn their keep by showing that they are completely on top of trades.
Imogen Makin, a regulatory expert at DWF Law, tells me: "My sense is that the regulator is being more proactive, not less. Compliance teams in financial services are working flat out, and they are not being distracted by internal meetings."
Regulators doing their job? City traders behaving?
It will never last.
