The Financial Conduct Authority (FCA) has used its multi-firm review of market soundings in UK equity capital markets (ECM) to evaluate how a long-established issuance practice affects market quality, information control and investor targeting. The review covered 63 ECM transactions in UK listed shares between January 2023 and June 2025, including fifty accelerated bookbuilds (ABBs) worth about £32 billion. Around 90% of the transactions involved market soundings, confirming their role as a standard feature of UK ECM execution.
The FCA assessed pre-announcement price moves, spreads, and trading volumes, alongside the number and type of investors approached. The supervisory focus is on whether processes produce controlled outcomes and prevent unnecessary dissemination of potentially price-sensitive information.
A Controlled Disclosure Regime
Under the UK Market Abuse Regulation (UK MAR), market soundings are a defined mechanism for communicating information before a transaction is announced to gauge investor interest. The regime allows legitimate disclosure of inside information where required conditions are met, giving disclosing market participants (DMPs), usually banks acting for issuers or shareholders, protection from an allegation of unlawful disclosure.In an accelerated bookbuild (ABB), block trade, placing or other time-sensitive equity transaction, a bank may contact selected institutional investors before launch to assess demand, price sensitivity, and likely deal size. The purpose is to reduce execution risk by helping the issuer or selling shareholder judge whether the transaction can clear at acceptable terms. The FCA recognises that market soundings can support price discovery and more effective deal execution in ECM.
The controls are operationally demanding. A DMP must assess whether the sounding involves inside information, record that assessment, obtain the market sounding recipient’s (MSR’s) consent to receive the information, and retain evidence of what was communicated and when. The MSR must then decide whether it holds inside information and whether trading restrictions apply.
From Records to Market Outcomes
The FCA review examines the effectiveness of controls in the market, not only the existence of scripts, records, and approvals but also how many investors were contacted, whether those investors were plausible participants, how long sounding windows remained open and how the market behaved before announcement. That places market soundings within the FCA’s wider data-led approach to wholesale markets supervision.
For banks, the findings increase pressure on investor-targeting and information governance. Broad outreach may improve execution confidence, but it also expands the population exposed to sensitive information. Where a bank contacts investors with limited evidence that they are potential participants, the control issue is not only process discipline. It becomes a question of whether the firm can justify the scope of dissemination.For MSRs, the review reinforces the need for independent assessment. Investors cannot rely solely on the bank’s classification of the information. They must determine whether they have received inside information and whether trading in the relevant instrument, or related instruments, should be restricted. That creates a direct link between sounding workflows, compliance decisions, and trading controls.
Technology and Surveillance Implications
Market soundings create a sequence of decisions, disclosures, acknowledgements, and restrictions. Firms that capture that sequence as structured data are better placed to evidence control effectiveness, investigate leakage concerns, and connect sounding events to later trading behaviour.
This creates a practical RegTech use case across workflow orchestration, communications capture, restricted-list management and market abuse surveillance. Controls need to show who was contacted, who consented, what information was disclosed, when restrictions began and when they were lifted. Surveillance teams also need the ability to compare sounding events with subsequent trading activity, order flow, and communications records.
The FCA’s findings strengthen the case for integrating market sounding controls with communications surveillance and trade surveillance. Siloed records may satisfy basic documentation requirements, but they provide limited support when firms need to evidence why investors were selected, how information moved and whether trading behaviour changed before announcement.
Jurisdictional Differences
The UK framework broadly mirrors the European Union Market Abuse Regulation (EU MAR), where Article 11 also defines market soundings as pre-announcement communications used to gauge investor interest. However, alignment between UK and EU isn’t static. European Securities and Markets Authority (ESMA) material published in February 2026 notes changes linked to the EU Listing Act, including amendments affecting inside information in protracted processes from June 2026. Firms active across UK and EU issuance markets therefore need governance that can manage divergent rules rather than a single post-Brexit rule set.
The United States follows a different model. There is no standalone market soundings regime equivalent to UK MAR or EU MAR. Comparable practices are usually described as wall-crossing or confidential pre-marketing, with legal analysis spread across insider trading law, confidentiality arrangements and securities offering rules. Securities and Exchange Commission (SEC) Rule 163B allows issuers to ‘test the waters’ with qualified institutional buyers and institutional accredited investors before or after filing a registration statement, but it is not a market-sounding safe harbour of the UK or EU type.
A Layered Control Model
RegTech architectures designed for UK MAR and EU MAR already provide a solid foundation for global issuance controls. They support structured workflows, consent management, information classification, audit trails, and restriction handling. Those capabilities are relevant to US processes, but they are not sufficient on their own.
Supporting SEC-facing activity requires additional controls around transaction-specific wall-crossing, investor eligibility, confidentiality undertakings, restricted-list governance, and consistency with offering disclosures. Legal, syndicate, and compliance records also need to connect, so firms can provide evidence for who was approached, why they were eligible, what was said and how subsequent trading was monitored.
UK and EU rules embed legal obligations within a defined market-sounding process under UK and EU MAR, allowing firms to demonstrate compliance through structured workflows and audit trails.
In the United States, there is no equivalent framework. Requirements span multiple SEC rules, including anti-fraud and offering provisions, requiring firms to coordinate legal, workflow, and surveillance controls at the transaction level. MAR-aligned systems require extension to support US issuance workflows, highlighting an opportunity for RegTech platforms to integrate legal, transaction, and surveillance controls into a unified pre-marketing governance framework.
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