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Corporate finance firms have been getting more attention from the FCA over the past few years, in the form of a Dear CEO letter in 2023, then a sector-specific survey issued earlier in 2025. These are now followed by the FCA’s Market Watch 83, which sets out the regulator’s observations and expectations on how corporate finance firms handle inside information and conduct market soundings.
There is a perception that corporate finance firms lag behind other sectors in the sophistication and effectiveness of their systems, procedures, and culture around the handling of inside information. This communication should serve as a warning to firms to make improvements where necessary or face the consequences.
What are the FCA’s concerns?
Market soundings mismanagement: The FCA has raised concerns around Disclosing Market Participants (DMPs) often sharing sensitive information with too many Market Sounding Recipients (MSRs), which raises the risk of unlawful disclosure. This was first highlighted in Market Watch 73, published in 2023. At the same time, the FCA found some DMPs did not ensure all MSRs received the same level of information which undermines the integrity of the market sounding process.
Weak governance: While acknowledging that small staff numbers and simpler governance arrangements are inevitable in smaller firms, the FCA believes there is an inherent risk of overfamiliarity between compliance and business teams, lack of independent oversight and informal implementation of policies and procedures in smaller corporate finance firms.
PA dealing breaches: Ongoing violations of personal account dealing policies were flagged as unacceptable. These breaches compromise market integrity and expose firms to regulatory action. This topic has been a focus since Market Watch 71.
These concerns are not isolated incidents. The FCA has consistently highlighted expectations and pointed out inadequate practices within corporate finance firms over the past few years. The regulator is emphasising that firms must maintain consistently strong systems and controls when handling inside information, whether in the course of advisory mandates, transactions, market soundings, or in other contexts.
What should firms be checking?
Market soundings: Are there sufficient systems and controls to ensure proper documentation of MSR selection; consistent distribution of deal-specific information; and the effective operation of a gatekeeping function as the primary contact point of DMPs?
Governance and the segregation of duties: How effective is the Compliance Oversight function or anti-financial crime controls? Are there other controls such as appropriate oversight by the board, internal committees or involvement by external consultants to ensure independence of the risk and control functions?
Personal account dealing: Are your staff trading rules adequate and tested periodically? If you have restricted lists or information barriers, are they effective?
Next steps for your firm
To align with these regulatory expectations, we recommend the following actions:
Gap analysis: Map current practices (soundings, insider lists, PAD, information access) against FCA expectations as expressed in Market Watch 83.
Policy refresh: Update policies and ensure they are documented, approved, and communicated. Include templates for soundings, scripts, MSR selection, insider lists.
Training & awareness: Ensure staff understand inside information, MAR requirements, and firm policies.
PA Dealing enhancements: Enhance oversight by logging and auditing PA Dealing transactions, tracking access to inside information, and monitoring trades and pre-approvals.
Board / Senior Management oversight: Senior leadership should be informed of risks and receive regular reports on soundings, PAD disclosures, insider lists, and any other issues
How can Ocorian help you?
We have been supporting corporate finance firms to identify, manage and mitigate their risks in order to meet FCA expectations since 1999.
We can also act as your partner to provide independent advice on regulatory matters and help you put in place measures that are both robust and proportionate to your firm’s size and risk profile, and make sure you are complying with FCA expectations.
Get in touch if you’d like to discuss any of the steps above or would like a short, free consultation.
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