SUSPICIOUS market activity before mergers and acquisitions fell to its lowest level in a decade last year, the Financial Conduct Authority (FCA) said yesterday.
The watchdog has been cracking down on insider trading for the last three years, in part by keeping track of unusual buying and selling of shares in the days ahead of a deal’s announcement.
Such activity can indicate sensitive information has been leaked or is being abused.
The level of so-called abnormal pre-announcement price movements occurred in 14.9 per cent of market announcements in 2012, according to the former regulator the Financial Services Authority’s final annual report.
That represents the third consecutive annual drop – the level stood at 19.8 per cent in 2011 and 21.2 per cent in 2010 – and takes suspect activity to its lowest level since 2003.
However the FCA also notes not all abnormal movement is related to insider trading, as media reports and analysts’ expectations can also produce a similar effect on stock market prices.
The report also noted five defendants in insider dealing cases pleaded guilty in 2012, while the regulator is also able to prosecute increasingly complex trading cases.
“Delivering market confidence has been achieved through supervisory initiatives such as market surveillance, market abuse and transaction reporting,” said FSA boss Lord Turner.
“It involved implementing key domestic policies such as those relating to listing rules, regulated covered bonds and client asset protection.”