ENF 14.8 Market abuse and breaches of the FSA Principles

Principle 5 (Market conduct) (see PRIN 2.1.1 R) requires a firm to observe proper standards of market conduct. Any behaviour which constitutes market abuse or requiring or encouraging will also constitute a breach of Principle 5. Where the principal mischief arising from the behaviour appears to be market abuse or requiring or encouraging, the FSA will take enforcement action under the market abuse regime rather than as a breach of Principle 5.

Behaviour which breaches Principle 5 may not necessarily be market abuse under section 118 of the Act (Market abuse). So, where the principal mischief arising from the behaviour appears to be a breach of Principle 5, and the FSA is satisfied that it would not be appropriate to deal with the case under the market abuse regime, it will take enforcement action as a breach of the Principles (together with other breaches of other rules, if relevant). However, where it is unclear or arguable where the principal mischief lies, the FSA may take enforcement action as a breach of the Principles (and, if relevant, breaches of other rules) and in the alternative, for market abuse or requiring or encouraging. Enforcement of the Principles is considered further in ENF 11.6 (Discipline for breaches of Principles for Businesses).