What the FCA is looking for is indicators of insider dealing. The official announcement of the release of the figures is in an alien form of English by someone who thinks more words, imprecise words and bigger words makes it sound more important. So, we'll scrap all of that and translate it.

In 2023, there was a significant reduction in the index figure, from 35.3% in 2023 to 30.3%. But percent of what?

The figure is "just one indicator of possible insider dealing, but it still has limitations as a broader measure of market cleanliness. This measure only captures instances where a takeover offer announcement has caused a positive abnormal price movement in the 2 days preceding the news." Right, so that's totally nonsensicle.

If an offer announcement causes an increase in share prices, how can that announcement preced the news? Also, there's a fundamental question: why is the period only two days and why does it look only at increases in share price?

Insider dealing is often used for short selling, but perhaps the FCA doesn't understand how markets actually work.

The FCA acknowledges that other factors come into play. Not all insider trading results in the price being affected, it says. It goes on " price moves could have been caused by financial analysts or the media correctly predicting likely takeover targets. This or other factors could lead to significant legitimate trades ahead of an announcement. So, we also monitor a range of additional indicators."

So, it's not only price movements, it's volumes.

The FCA publishes an annual Abnormal Trading Volume (ATV) Measure. This looks for abnormal increases in trading volumes ahead of potentially price sensitive announcements, covering equity instruments and some equity derivatives.

But the FCA looks at at tiny percentage of announcements; 121 out of 2,163. It says that the market "remained in a period of elevated market volatility (which it does not define relative to previous years) driven by glogal events, which could have affected the Abnormal Trading Volume figure.

And then there's this which reinforces that no single measure is conclusive: "The existence of announcements where we have found statistically significant increases in volumes does not mean that market abuse occurred before each of those announcements. Volumes can fluctuate for many reasons, but it is an indicator that market abuse may have occurred."

But then it all gets more interesting, so far as financial crime specialists are concerned because the FCA looks at the type of trade and the person making the trade. In short, it does a KYC analysis, albeit on a tiny fraction of trades (while penalising regulated entities if they don't do 100% assessment. It's talking about "potentially anomalous trades" and that is defined as "
- the participant does not typically trade in this instrument
- the participant traded significantly more in the direction of the announcement
- the participant made a significant profit from trading positions established in the period immediately prior to the announcement"

The FCA's obsession with juvenile and imprecise language is matched only by its obsession with adjectives and seemingly any adjective will do.

"The Potentially Anomalous Trading Ratiofor 2023 was 3.3% which represents a small decrease from 4.7% in 2022. Like the earlier percentage, we don't know what this is a percentage of. But we do know that a reduction from 4.7 to 3.3 is far from small: it's a gnat's kiss away from 30%. And we do know what that 30% is of: it's of 4.7% (of what we don't know!)

The FCA attempts an explanation: "It is important to understand this ratio in the context of the overall level of trading considered for this measure. Some 99.1% of trading activity did not occur during a sensitive time period. For example, not preceding a potentially price sensitive news announcement where the price did move significantly. For the 0.9% of trading activity that justified further review, only 3.3% of that trading was considered potentially anomalous – a very small percentage of overall UK trading activity."

er.. So if we look at the announcement of a takeover and review transactions within the two days prior to the announcement some 0.9% of trades during the year did not fall within that two days. Those were then reviewed and of those 3.3% were "potentially anomalous. To be clear, then, suspicious transactions were 3.3% of 0.9% of total annual trading volume.

Is this insignificant? No, not at all.

The London Stock Echange Group says that its trading volume (i.e. number of trades not value) yesterday was 1,221,383,001

It was an average day but the previous day was bigger: 2,853,381,408 even though the number of instruments trades remains broadly similar each day.

So, if for the two days before today involves, in round terms, 4,000 million trades, we would be looking at (0.9%) 36,000,000.

Of those, 3.3% is 1,188,000

But that's only if there were unusual movements in any of the companies concerned.

What can we say about all of this?

The FCA is doing a mountain of analysis on a vast amount of data but ultimately we don't know what it means. We don't know how many transactions were actually suspicious and we don't know what some percentages relate to.

Se we have no way of knowing whether the 3.3% that the FCA seems to think is a good result is, actually, a good result at all.

It might turn out useful, or it might just turn out to be a puff piece.