FCA warns about opportunistic strategies in the credit derivatives markets

The continued pursuit of various opportunistic strategies in the credit derivatives markets, including but not limited to those that have been referred to as ‘manufactured credit events’, may adversely affect the integrity, confidence and reputation of the credit derivatives markets, as well as markets more generally, the FCA has said in a joint statement.

US Commodity Futures Trading Commission (CFTC) Chairman J. Christopher Giancarlo, US Securities and Exchange Commission (SEC) Chairman Jay Clayton, and UK FCA chief executive Andrew Bailey said “these opportunistic strategies raise various issues under securities derivatives, conduct and antifraud laws, as well as public policy concerns”.

The bodies will make collaborative efforts to prioritise the exploration of avenues, including industry input, which will address these concerns and foster transparency, accountability, integrity, good conduct and investor protection in these markets.

“These collaborative efforts would not, of course, preclude other appropriate actions by our respective agencies or authority,” the FCA said.

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