Insider dealing related STORs back into pole position in Europe
ESMA’s recent report relating to Suspicious Transaction and Order Reports (STORs) provides the market with an overview of their use in different EU countries.
STORs are an important tool for NCAs to detect, monitor and investigate practices relating to market abuse. MAR requires firms or individuals to report orders and transactions that could constitute insider dealing, market manipulation or attempted insider dealing or market manipulation to the NCA of the trading venue.
In earlier ESMA reports it was evident that Brexit had a significant impact on the STOR related statistics. This report focusses on STORs received during 2023 and although the conclusion is that the figures are consistent compared with the previous years, there are several interesting observations, including:
- the total number of STORs submitted rose by 12% to 6,530, compared to 5,833 in 2022
- Germany again submitted the most by raising 33% of the total but this was down from 42% last time with German investment firms submitting 3% fewer STORs than in 2022
- Sweden, a country that prides itself on the quality of its market abuse surveillance, submitted the third highest number of STORs, with 9% of the total and significantly more than many other countries. The number of STORs solely from investment firms in Sweden was up 3% on 2022
- the ratio of notifications by trading venues (10%) and investment firms (77%)
- the percentage of STORs by instrument type remained stable with shares accounting for 85%, bonds 7% and derivatives 5%.
Insider dealing vs market manipulation
One of the interesting aspects of the report is seeing that more STORs now relate to insider dealing than market manipulation. Although this was always historically the case, the opposite has been true during recent years.
Insider dealing related STORs accounted for 51% in 2023, up from 45% of the total in 2021 and 44% in 2022. Whereas alleged market manipulation accounted for 47% in 2023, down from 52% of the total for the previous four years.
Although this annual report from ESMA excludes STORs received by the UK’s FCA, it still highlights some interesting trends. It is too early to say whether the increase in STORs relating to insider dealing is a sign that firms are becoming more sophisticated in their approach towards surveillance, including electronic communications surveillance.
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