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The Financial Conduct Authority (FCA) has published a multi‑firm review examining the use and effectiveness of market soundings by wholesale banks on transactions in UK listed shares.
A market sounding is broadly where inside information is selectively disclosed to potential investors to sound out their views ahead of a capital raising or other transaction. The disclosure of inside information as part of a market sounding is permitted under the UK Market Abuse Regulation (UK MAR) subject to certain safeguards.
In September 2025 the FCA published a summary of its findings from its ‘deep dive’ reviews of firms’ systems and controls for handling inside information during market soundings in the previous five years (read more on our blog post here).
This latest review focused on five banks active in ECM, and 50 accelerated bookbuilds (ABBs) of UK equity and equity‑linked transactions worth over £50 million between January 2023 and June 2025 where they acted as book runner (representing 60% by number and 66% by value of UK ABBs in that period).
The FCA’s findings include:
- Market soundings remain standard practice – Around 90% of UK equity transactions reviewed involved market soundings, particularly ABBs.
- Limited impact on trading – While trading volumes fell by an average of 13% during the sounding period, the FCA found no material adverse impact on other market metrics (such as spreads, market depth or share price).
- Scale of market soundings – On average, banks approached 33 investors per transaction, with some exercises involving significantly more. The FCA notes that larger soundings did not consistently lead to better demand or oversubscription. It therefore reminds firms that the risk of a leak of inside information increases as soundings expand in size or duration, and policies and procedures on the scale of soundings should reflect the risks accordingly.
- Governance and controls – The FCA observed differing approaches to oversight, compliance involvement and record‑keeping, but no significant control failures. Minor record‑keeping errors were the most common issue the FCA identified.
The FCA has said it will consider the feedback on market soundings it received from banks during this review (including related to continued alignment with the EU regime and reducing record‑keeping burdens) in any future changes to UK MAR.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
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