UK to tape trader cellphones to fight market abuse


Feb 11, 2006
By Kirstin Ridley

LONDON | Thu Nov 11, 2010

Investment bankers and traders in Britain will have their company mobile phone calls taped and stored for six months in an attempt by the regulator to crack down on insider trading. The Financial Services Authority (FSA), which wants to impose the rules from November 14 2011, urged financial companies to take "reasonable steps" to ensure staff did not sidestep the rules by having "relevant conversations" on private devices.

Banks have worried that the new rules will prove costly, might breach various national privacy laws and would result in duplication if European amendments follow Britain's lead.

One global investment bank estimated the cost of recording all company BlackBerry phones issued to front office staff at over 2.6 million pounds ($4.2 million) per year, while others argued that market abusers would just seek other avenues.

But in a policy document published on its website, the FSA insisted taping business mobile phones would close off an important route to those attempting insider trading.

"It is our contention that by having as comprehensive a taping regime as possible, we limit the scope or temptation for employees to infringe the market abuse rules on fixed or mobile lines which are not taped," the FSA stated.

"And by taping these previously unrecorded lines, we have an additional source of evidence to draw on, which our experience shows can be of significant value to our investigative and enforcement work," it added.

Although the FSA has stepped up its battle against insider dealing in London, launching arrests, prosecuting and jailing its first offenders, it has its work cut out.

Regulatory data shows unusual share price movements -- a potential indicator of market abuse -- in around 29 percent of takeover announcements.

The British government plans to break up the FSA and roll parts of the regulator, together with the Serious Fraud Office and the Office of Fair Trading, into a single agency to tackle white collar crime.

($1=.6192 Pound)

(Reporting by Kirstin Ridley; Editing by Jon Loades-Carter - REUTERS)

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