Mr A Murfin
Markets and Exchanges Division
Financial Services Authority
30 November 2000
Dear Mr Murfin
MARKET ABUSE - CP 59
Although we have made no formal response to the Consultation Papers on this topic, it seems possible that treasurers could unwittingly fall foul of the provisions. It would normally be our intention to inform our members of the aspects of the regime that would apply to them but we are very unclear what impact the new rules will have on treasurers.
We have been advised that treasurers are most likely to run up against market abuse problems in the market information area - shoddy or negligent documents or briefings (or omission to release price sensitive information) which wrong foots the market. It seems quite unlikely that a treasurer operating in a professional manner would fall foul of the new rules in most financial markets (given that they normally are not active in equity markets nor involved with equity investors). However, with sections of the corporate bond market exhibiting equity-like volatility and an increasing level of direct contact between issuers and bond investors, treasurers may find that their normal briefing activities put them at risk.
It has been suggested by some commentators that different standards will apply to the commodities, interest rate and currency derivatives markets (in which many treasurers are active) than to the securities markets but unless the FSA gives guidance there will be no way of knowing.
We believe it is vital that the FSA provides swift guidance (verbal, if necessary) particularly in the early days of the regime. We would also like to see a regular bulletin produced by the FSA on guidance it has provided to others. This would be extremely helpful to us in providing advice to our members and would also help to make market participants more comfortable with the new rules.
Yours sincerely
Philip Gillett,
Chairman of the Technical Committee