Financial Regulatory Forum

COLUMN-Cocoa’s rise and fall puts spotlight on FSA: John Kemp

– John Kemp is a Reuters market analyst. The views expressed are his own –

By John Kemp

LONDON, Sept 15 (Reuters) – Cocoa’s stunning rally and equally spectacular bust over the last five months provides compelling evidence that large positions, especially in contracts close to delivery, influence futures prices, and that regulators should develop effective position limits to ensure market prices reflect supply-demand fundamentals and not the impact of dominant positions.

Britain’s Financial Services Authority (FSA), which regulates commodity markets, continues to insist there is no evidence large positions, either singly or collectively, influence futures prices, most recently in a position paper published in December 2009 (http://www.fsa.gov.uk/pubs/other/reform_otc_derivatives.pdf).

The FSA has rejected calls to follow the U.S. Commodity Futures Trading Commission (CFTC)’s lead in imposing position limits on commodity derivatives. It insists that London’s “position management” approach is more flexible and effective.

“Moving away from a regime which is flexible and established, to a different and more rigid system would imply there is an identifiable problem with the current regime. We have seen no evidence of this,” according to the FSA.

FACTBOX-UK fleshes out financial supervisory shake up

July 26 (Reuters) – Britain detailed on Monday how its new financial supervisory regime will work from 2012 in a move that scraps the Financial Services Authority and turns the Bank of England into one of the most powerful central banks in the world.

Supervisors will be required to intervene more in day-to-day operations of banks, insurers and markets to nip risks in the bud before they destabilise the broader financial system.

The reform abolishes the discredited “tripartite” system of the FSA, the government and the Bank of England working together to supervise Europe’s biggest money centre.

COLUMN-Even sober brokers can abuse markets out of hours: Kemp

– John Kemp is a Reuters market analyst. The views expressed are his own –

By John Kemp

LONDON, June 29 (Reuters) – With its decision to fine and ban a former oil broker for manipulating the price of Brent crude oil last year as a result of trading while drunk, Britain’s Financial Services Authority (FSA) has continued its push to introduce higher standards into trading on the London commodity markets.

Former PVM oil broker Stephen Noel Perkins was so drunk he had a limited recollection of events and had been in an alcohol induced blackout, according to the FSA’s notice announcing a minimum five-year ban and fining him 72,000 pounds.

COLUMN-FSA coffee case heralds commods crackdown: John Kemp

LONDON, June 2 (Reuters) – The Financial Services Authority’s (FSA) decision to fine a London coffee broker 100,000 pounds ($146,400) and ban him from working in the financial services industry marks a significant toughening in the market abuse regime for commodities.

The banning order on Andrew Kerr marks the first successful action for market abuse in commodity markets. Kerr is accused of helping a client execute large orders during a period in which reference prices were set based on a volume-weighted average. It was a deliberate move to influence market prices in the run up to an option expiry.

While Kerr’s behaviour was unusually blatant, and unfortunately for him captured on tape in unguarded language, using large volume trades to support or batter market prices close to daily or option settlements is common practice across commodity markets.

COLUMN-UK financial regulator gets first big scalp: John Kemp

– John Kemp is a Reuters columnist. The views expressed are his own –

By John Kemp

LONDON, May 18 (Reuters) – The UK Financial Services Authority’s (FSA) efforts to clean up the City of London have often seemed to owe a debt to Monty Python’s ineffectual Spanish Inquisition.

Until now, the round-up has been confined to a list of clueless bit players and departed has-beens, all marginal to the industry. It has inspired irritation more than fear or the determination to reform.

ANALYSIS-UK bank changes will be outweighed by EU

By Huw Jones

LONDON, May 12 (Reuters) – The new British government will make the Bank of England responsible for spotting asset bubbles as part of global efforts to learn from the financial crisis but the new set-up will still be overshadowed by EU centralisation.

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NEWSMAKER – Chief enforcer takes tough line on UK market abuse

By Clara Ferreira-Marques and Huw Jones

LONDON, March 30 (Reuters) – A tough-talking, high-flying litigator, Margaret Cole joined Britain’s financial regulator five years ago as it began a crackdown on market abuse.

London’s biggest-ever swoop on an alleged insider dealing ring last week — a drama involving some of London’s best-known institutions and seven arrests — was evidence for many that this self-assured lawyer means business.

The UK’s Financial Services Authority (FSA), where Cole is director of enforcement and financial crime, has in the past been criticised for being too soft on market abuse, where cases are notoriously lengthy, complex and tough to nail.

Reuters Summit – Regulators, fund providers, at odds over investor information

By Antonia van de Velde and Martin de Sa’Pinto

LUXEMBOURG, March 24 (Reuters) – Regulators and fund providers agree on the need to restore investor faith in financial markets, but are at odds over how to both ease client fears and guarantee a greater degree of security.

Regulators want more information on funds and investments to ensure investors are fully aware of the risks they are taking on, but the industry faces a tough challenge in informing clients of potential risks without scaring them off.

“It is clearly a pivotal moment in the regulatory business,” Sheila Nicoll, director of conduct policy at Britain’s Financial Services Authority told delegates at the ALFI fund association’s Spring conference.

FACTBOX – Britain makes arrests in insider dealing probe

LONDON, March 24 (Reuters) – A raid on top banks and a hedge fund on Tuesday as part of an insider dealing investigation sent shockwaves through London’s financial centre, as British authorities try to establish their crime-fighting credentials.

It was the fifth set of arrests carried out by the Financial Services Authority (FSA) into insider dealing in the past two years. Here are key facts and recent events:

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UK won’t tighten liquidity rules on banks for now

By Huw Jones

LONDON, March 8 (Reuters) – Banks operating in Britain were given more breathing space on Monday when their regulator, the Financial Services Authority, said it would not demand higher liquidity levels until the economy is recovering properly.

The FSA angered local banks last year by pushing ahead with a new liquidity regime requiring then to hold buffers of cash or highly-liquid assets like government bonds to withstand market shocks for a week or more without having to raise fresh capital.

The watchdog began rolling out the new regime last October, which includes frequent reporting of liquidity levels as part of wider efforts to learn from the financial crisis and lessen the need for more massive taxpayer bailouts of banks.

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