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making trading suspensions effective August 4, 2009

Posted by Bradley in : financial regulation , trackback

The UK Government is consulting on the idea of making it easier for the FSA to communicate trading suspensions with respect to the OTC market to market participants by making general announcements (by Regulatory Information Service (RIS)) rather than by issuing individual instructions to prevent specific market participants from trading. However, under the new rules the FSA would retain the ability to direct a trading suspension to groups of market participants or to individual firms rather than issuing a general order. The consultation document suggests this power is likely to be used very rarely, in contrast to suspension of trading on regulated markets, and it doesn’t seem to be sensible to require the FSA to send out individual notices where market participants could reasonably be expected to pay attention to regulatory announcements. The way that the document assumes that suspensions directed to some part only of the market contrasts with how I have always thought about suspensions (and see the SEC on suspensions here). And the draft statutory instrument in the document suggests that individual firms may be able to challenge a suspension with respect to their trading. But this suspension power is, under Mifid, an incident not of the regulation of regulated markets but of the regulation of investment services businesses. Despite all the talk about transnational agreements about financial regulation, comparing financial regulation across borders doesn’t get any easier!


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