FSA denies CDO insider-trading crackdown
Regulator says investigations into certain market groups do not represent a CDO insider-trading initiative
The UK Financial Services Authority (FSA) has denied it has launched a new investigation into collateralised debt obligations (CDOs) on corporate debt, as reported by Bloomberg. The news service stated the FSA has been requesting information from market groups to ascertain the possibility of insider trading occurring when the products are traded.
However, a source at the regulator has denied the investigations represent a particular initiative from the FSA. “We have a duty to look at all aspects of market abuse,” they said, and “in actual fact it’s not a specific effort.”
“A couple of years ago we beefed up our enforcement capabilities,” they said, noting that, while investigations into market abuse in the use of CDOs are a priority for the regulator, “it’s not above and beyond any other form of market abuse we are looking into.”
Collateralised debt obligations are a type of structured asset-backed security whose value and payments are derived from a portfolio of fixed-income underlying assets, which have been widely blamed for the subprime crisis that sparked the broader global economic crisis.
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