Questions remain over CISX mess
Friday 25th October 2013, 4:00PM BST.
ONE of the difficulties with the regulatory deficiencies disclosed at the Channel Islands Stock Exchange is knowing when it is time to stop asking questions about the extent of those failures.
After all, new chairman Jon Moulton commissioned the damning report highlighting what has gone wrong and is busy cleaning up the mess. Move along, there’s nothing to be seen here…
But at issue are matters of substance, not technical, tick-box omissions. This was a board of directors, involving some of the highest profile industry players, who apparently failed to exercise adequate regulatory oversight.
Whether investors were disadvantaged as a result remains to be seen but at least some believe they have grounds for claiming that they were.
Yet those in charge cannot claim they were unaware they were supposed to be regulators in their own right given that their own rules set out what is acceptable behaviour and what is not, particularly regarding market abuse.
But having ignored a ‘hideous’ example of ineptitude over unbelievable price movements in the Clerkenwell affair, an ad hoc committee of the board cautioned against undue haste in the matter – two years after it had first flared and despite it being picked up by the newspapers and, as a result, the Guernsey Financial Services Commission.
But even when forced to confront something not right, the exchange’s correspondence with the GFSC ‘displayed an inexplicably hostile and uncooperative tone’, according to the independent review of market surveillance by the CISX.
Why? Most institutions would go out of their way to avoid conflict with the commission or at least try to placate it.
And even when the GFSC had raised possible market abuse, the CISX was still being obstructive.
Did the board think the status of the exchange and its exalted membership put it above such considerations? Did having friends in high places – the then chairman of the commission was also on its board – cloud its judgment?
Seen through the eyes of the reviewer, some CISX behaviour was inexplicable.
Or was it simply that the exchange was successful, people were making money and no one wanted to rock the boat?