FCA Warns On Market Abuse Rules After Russian Sanctions

(March 3, 2022, 6:50 PM GMT) -- Britain's Financial Conduct Authority warned Thursday that a raft of financial sanctions imposed on Russia may have added new wrinkles to the application of inside information laws covered by the U.K. Market Abuse Regulation.

The warning reminded ​​​​​​issuers of securities on U.K. trading venues that the Market Abuse Regulation requires finance firms "to fulfill their obligations to disclose inside information as soon as possible unless they have a valid reason under the regulation to delay disclosure."

The Russian invasion of Ukraine and responses by Western governments may alter the nature of information that is material to a business' assets, operations and prospects, the regulator said. 

The FCA warning comes after the U.K. and other Western governments restricted trade in Russia assets and blocked some of its banks from SWIFT, the global messaging system for financial transactions.   

The British sanctions prevent Russian state and private companies from raising funds in Britain through securities and loans. They also limit the amount of money that Russian nationals will be able to deposit in U.K. bank accounts.

Companies assessing the effect of financial sanctions in all relevant jurisdictions have been urged to talk to their lawyers to clarify compliance questions.

"Both the events themselves and the wide range of financial sanctions imposed in response on Russia, Russian individuals and Russian business by numerous jurisdictions worldwide will have multiple impacts on companies with securities admitted to U.K. markets," the FCA said.

The 2016 Market Abuse Regulation seeks to prevent insider trading and market manipulation to protect investors. It covers financial instruments admitted to trading on a U.K.- or a European Union-regulated market or for which a request for admission to trading on a British or a market regulated in the bloc has been made.

The watchdog said companies should ensure the market is fully informed of any information or changes that are required to be disclosed under the regulations.

It added that firms "are also reminded that disclosure obligations continue to apply even when trading of securities has been suspended."

"We will continue monitoring the market carefully to ensure these obligations are met in full," the FCA said.

The government said earlier on Thursday that it will ban Russian aviation and aerospace industries from taking out insurance or reinsurance in Britain, in a fresh round of sanctions following Russia's invasion of Ukraine.

--Additional reporting by Martin Croucher and Najiyya Budaly. Editing by Joe Millis.

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