Compliance during COVID-19

Feb 9th '21

In this period of uncertainty and pressure on firms, regulators around the world have been quickly changing their strategies to support firms, so they all can manage the situation at best.


While regulators understand the difficulties of the current situation due to the COVID-19 crisis, they expect business as normal and firms to take all steps to meet their regulatory obligations. Regulators around the globe have been publishing constant updates and expect firms to have the ability to operate effectively during this period, focusing on serving and supporting their customers, maintaining compliance and mitigating the risks that the situation has brought to all regulated firms.


Market Abuse Regulation (MAR)

The Financial Conduct Authority FCA released a statement last year, headlining the Market Abuse Regulation with a further warning: “The Market Abuse Regulation (MAR) remains in force and companies are still required to fulfil their obligations concerning inside information as soon as possible unless a valid reason to delay disclosure under the regulation exists.”


The European Securities Markets Association (ESMA) has similar expectations for all regulated firms, expecting business as normal, continuity planning from firms and their other regulatory obligations. In early March, ESMA announced: “All financial market participants, including infrastructures, should be ready to apply their contingency plans, including the deployment of business continuity measures, to ensure operational continuity in line with the regulatory obligations.”


In case a firm has important information regarding their regulatory obligations being impacted by Covid-19, they should immediately contact the regulator and make them aware. ESMA is appealing for transparency and expects firms to act in accordance with their obligations under the MAR. ESMA stated that firms must be clear on the actual and potential effects of COVID-19 in their financial reporting.


In North America, the US Securities and Exchange Commission (SEC), government, and market participants are also working hard to reduce the impact of COVID-19 on securities markets and to ensure markets have continuity. A considerable warning was released on insider trading, in the current circumstances; corporate insiders hold new material non-public information that may have an even greater value.


Those with such access – including, for example, directors, officers, employees, and consultants and other outside professionals – should be mindful of their obligations to keep this information confidential and to comply with the prohibitions on illegal securities trading,” US SEC. The SEC released a statement in March 2020, warning a possible increase in insider trading during the crisis, highlighting the regulator commitment and its “substantial resources” to protect investors.


Senior Managers and Certification Regime (SMCR)

The FCA will provide flexibility on SMCR requirements due to Covid-19 crisis. The FCA and Prudential Regulation Authority (PRA) intent to provide flexibility for these dual regulated firms and provided more information for firms in this case. They are providing a relaxed rule, giving more time for firms to submit their Statement of Responsibilities (SoRs). The joint FCA and PRA stated: “In normal circumstances, the 12-week rule provides enough flexibility for firms to deal with temporary or unexpected SMF absences. The FCA and PRA are currently gathering evidence on whether the 12-week rule is likely to give dual-regulated firms enough flexibility to deal with temporary absences of SMF as a result of coronavirus.”


For single regulated firms, the FCA has confirmed that it does not require them to have a single Senior Manager responsible for their coronavirus response.


We understand the challenges of firms during this pandemic and if you are looking for ways to enhance your compliance department and meet regulatory obligations, contacts us to see how we can help.


About us

At LS Consultancy, we offer a complete solution with a range of cost effective, regulatory compliance and marketing products and solutions including copy advice which are uniquely suited to supporting firms.


Explore our full range today.


Contact us