UK regulatory body the Financial Services Authority (FSA) has proposed changes to its enforcement methods that will allow it to suspend or restrict firms’ trading activities if they breach regulations.
The proposal is part of consultation paper released by the FSA today that details how it plans to use the new powers afforded to it by the Financial Services Act, which came into force on 8 April 2010.
Under its existing powers, the FSA can either impose a financial penalty or a public censure on people or firms that break the rules.
The paper says that where misconduct is found to be widespread across a number of individuals, for example a trading desk, suspending that business area “would demonstrate a clear link between the sanction imposed and the reason for the disciplinary action”. The FSA also believes that suspending a business area is more likely to redress any advantage that was gained unfairly than having to pay a financial penalty, but added that such restrictions would not be imposed if doing so would cause serious financial hardship.
The paper also includes proposals to redraft the provisions requiring disclosure of short-selling positions as rules in a new part of its handbook, which will cover financial stability and market confidence, impose fines or censures on those who breach short-selling rules, and impose financial penalties on individuals who carry out controlled functions without the necessary approval from the FSA.
The deadline for responses to the consultation paper is 25 June.
The FSA has fined a number of firms and individuals for market abuse so far this year. Last Friday it fined UK market maker Winterflood and two of its traders £4.25 million for their participation in a share-ramping scheme. This took the total market abuse fines so far this financial year to £10.96 million.