Belgian Financial Institutions Face Increased Scrutiny on Market Abuse Prevention

Introduction

The Belgian supervisory authority, FSMA, has been intensifying its focus on preventing and detecting market abuse in recent years. In 2020, ESMA reported Belgium as the European country responsible for the majority of administrative sanctions imposed with respect to insider trading.

Increased Scrutiny and Regulatory Pressure

Financial institutions in Belgium are facing increased pressure to ensure they have robust internal controls in place to prevent and detect market abuse. The heightened scrutiny comes at a time when the European Commission is reviewing the Market Abuse Regulation (MAR) and is expected to make changes that will impact how financial institutions operate.

Challenges Posed by the COVID-19 Pandemic

The COVID-19 pandemic has brought its own set of challenges for financial institutions, including:

• Increased volatility and trading activity: The pandemic has led to a surge in alerts on suspicious transactions.
• Dealing with increased volume of alerts: Financial institutions must find ways to deal with the increased volume of alerts without neglecting the increase in risk.

Recommendations for Financial Institutions

To ensure compliance with regulatory requirements and mitigate the risk of market abuse, financial institutions in Belgium are urged to:

Review Current Practices and Ensure Effective Internal Controls

• Review current practices and ensure effective internal controls are in place
• Implement good practices for the internal control environment

Prevent Market Abuse and Insider Trading

• Formulate insider lists and set up cross-market order book surveillance
• Ensure adequate controls are in place to prevent potential insider trading due to non-public data

By taking these steps, financial institutions can ensure they are compliant with regulatory requirements and mitigate the risk of market abuse.