Market Abuse Reporting System Sold for £15m
The Financial Services Authority (FSA) has decided to sell its Approved Reporting Mechanism (ARM) known as the Transaction Reporting System (TRS) to the London Stock Exchange (LSE) for £15 million in a conditional agreement.
Corporate finance advisors from PricewaterhouseCoopers served to advise FSA on the sale, with Mills & Reeve as legal advisors. The agreement remains subject to clearance by the Office of Fair Trading.
The sale came after the US Securities and Exchange Commission adopted late last month rules to investigate a future “flash crash” by improving its tracking system on the activities of large traders like banks, hedge funds and big proprietary trading companies.
The reporting system is established in the UK market for the reporting of transactions in regulated instruments by firms to the FSA in accordance with SUP 17 of the FSA Handbook and the Market in Financial Instruments Directive (MiFID).
With the Transaction Reporting System, the FSA detects and investigates suspected cases of market abuse, insider trading, market manipulation. This is also used as part of FSA’s monitoring of supervised firm activity.
When MiFID was introduced in November 2007, there has since been an increase in the volume, scope and constituent of firms obliged to report and subsequently established a reporting regime and systems through which transactions are reported, known as ARMs.
The FSA developed the reporting system to provide firms with a method for meeting their MiFID reporting obligations.
According to the FSA, there is now a competitive market for the provision of transaction reporting services to the industry, in which the LSE operates its own ARM service through its UnaVista platform.
The FSA said it is confident that the ARM market is now sufficiently developed to enable firms to meet their reporting obligations to the FSA.
It concluded that maintaining an ARM no longer formed part of its core role as a regulator.
The FSA carefully selected an established operator in the London Stock Exchange after a lengthy and competitive sale process, which will enable existing customers of TRS to fulfil their ongoing reporting obligations.
In addition, the LSE’s UnaVista system offers additional services beyond those which are currently offered by TRS, which may be of benefit to TRS clients.
The LSE plans to migrate TRS customers to its UnaVista platform on completion of the transaction.