Capital markets

Part of our work is proactive supervision with an emphasis on promoting good market practices and codes of conduct in order to maintain market efficiency and investor confidence. Supervision is also reactive, focusing on, among other things, cases of suspected market abuse, such as the abuse of inside information, market manipulation and breach of disclosure rules.

Confidence is built by

• high quality, clear and up-to-date information on products and services
• market participants’ appropriate codes of conduct in marketing, terms and conditions of contract, and otherwise in customer relations
• disruption-free functioning of trading venues in the securities markets.

We supervise listed companies’ financial reporting, i.e. compliance with International Financial Reporting Standards (IFRSs).

The purpose of IFRS enforcement is to promote the provision of transparent, sufficient, comparable and comprehensible financial information to markets in order to support investors’ decision-making.

Supervision of financial reporting focuses on Finnish listed companies that issue securities, such as shares or bonds, for trading on a regulated market. Supervision of financial reporting is targeted at financial reports, such as financial statements and interim reports, published by issuers of securities.

See also:

Video on YouTube: "What does IFRS enforcement mean for listed companies?", available only in Finnish.

International supervisory cooperation

The Financial Supervisory Authority (FIN-FSA) actively participates in cooperation between financial reporting supervisors in the EU. The Corporate Reporting Standing Committee (CRSC), which is a permanent committee of the European Securities and Markets Authority (ESMA), coordinates supervision and other operations of its member organisations in matters related to financial reporting of listed companies.

The CRSC has developed supervisory cooperation and has harmonised financial reporting supervisory methods in Europe. The objective of the cooperation is to promote, on the one hand, harmonisation of supervisory methods and, on the other hand, the uniform application of the IFRS. Supervisory cooperation and coordination are crucial, as regulation is global and supervisory solutions should therefore be internationally sustainable.

The CRSC regularly arranges meetings for supervisors of financial reporting (European Enforcers Coordination Sessions, EECS), in which the FIN-FSA also participates. The EECS now uses a common supervisory decision database, where all key decisions by EU member states on supervision of financial reporting are recorded. ESMA publishes these decisions 2-3 times per year. The publication of the decisions aims to inform market participants about what European supervisors have observed in their supervision of the financial reporting.

See also:

• IFRS enforcement

Supervision of prospectuses in connection with securities offerings is primarily ex ante supervision. We scrutinise and approve prospectuses issued for securities offerings and listing purposes. We review prospectuses to ensure that they contain the information required by securities market regulations. We also assess the consistency of the prospectus content and how well the information provided in the prospectus meets the general quality requirements set for information. These general quality criteria include, among other things, the adequacy, relevance, comprehensibility, consistency, justifiability, timeliness and clarity of the information.

The FIN-FSA must approve a prospectus, unless it is obviously inaccurate or incomplete. We cannot, however, verify the accuracy of the information provided in a prospectus; responsibility for the accuracy of the information content lies with those who prepare the prospectus.

Supervision concerning prospectuses generally relates to the time when the prospectus is examined. In this respect, supervision is conducted as an ex ante exercise. Even so, supervision also includes an ex post aspect, in that the information content of prospectuses may, if necessary, be compared with information subsequently obtained from a listed company or securities offering. In that event, we evaluate whether the information in the prospectus has been true, adequate and justified also in the light of the more recent information.

Listings and securities issuances often raise specific questions concerning the presentation of financial information. These questions may, for example, refer to pro forma information and its appropriateness and how corporate acquisitions and mergers are dealt with in the financial statements and half-yearly reports included in the prospectus.

The primary aim of supervision of disclosure obligations is to ensure that investors have access to adequate information for making an informed assessment of listed companies and their securities. We consider it important that a high degree of confidence in information disclosed by listed companies is maintained in Finland.

Supervision includes both examination of irregularities as well as thematic reviews

We monitor listed companies’ compliance with their ongoing and periodic disclosure obligations, both proactively and reactively. Proactive supervision includes, for example, on-site visits related to disclosure practices and meetings with companies listing on the main list. Reactive supervision consists of both examinations of individual cases of detected irregularities and thematic reviews targeted at several listed companies.

We monitor that listed companies disclose inside information as soon as possible. Inside information may include, for example, corporate acquisitions and general financial information, such as future prospects and profit warnings.

As regards periodic disclosure obligations, we monitor that companies’ half-yearly reports and financial statements and management reports include the information required under securities market regulations. We also supervise that companies publish this information within the periods of time prescribed by law. Where possible, we also endeavour to establish that the information content of these reports meets the general quality criteria set for information (e.g. the adequacy, relevance, consistency, justifiability, timeliness and clarity of information).

In connection with the supervision of ongoing and periodic disclosure obligations, we also encounter more specific questions that we need to address in our supervisory work. Such questions may concern the justifiability or potentially misleading nature of assessments of future prospects, the timeliness and clarity of profit warnings, as well as the objective, separability and accounting principles of pro forma information.

A precondition for the functioning of the securities markets is that investors can place confidence in the markets and market participants. Market abuse erodes this confidence. The FIN-FSA seeks both to prevent such abuse and to conduct retrospective investigations when abuse occurs.

Suspected cases of abuse of inside information are investigated

The aim of actual insider investigation is to find out whether inside information has been abused in securities trading and, if so, who is guilty of such conduct. As well as suspected cases, other incidents are also routinely taken up for investigation. These include large-scale corporate acquisition projects, which can be assumed to involve significant inside information and a wide range of insiders.

We monitor trading in the securities markets and current events in the markets.

Investigation of a suspected case of abuse of inside information usually commences from the publication of a stock exchange release on the part of a listed company. The development of the company’s share price may have changed considerably prior to the publication of the release or the trading volumes in the company’s share may have been on a clearly rising trend. We also receive reports and tips regarding suspected cases from the stock exchange, market participants, the media, private investors and foreign supervisory authorities.

Our insider investigation activities seeks to identify the sources and the extent of potential dissemination of inside information. We request the company to submit information on all those persons who have been involved in handling a matter falling within inside information criteria (project-specific insider registers) and when these insiders have become aware of the matter. In addition to the trading activity of individuals who have received inside information, we also investigate the trading activity of their closely associated persons and entities in which they exercise influence.

The duration of an insider investigation is determined by trading activity, the scope of investigation and the time needed to obtain information. The main challenge to the investigative procedure lies in obtaining adequate proof of a link between an insider and a person who has traded in the company’s share, unless the insider is the person concerned. Based on the results of our investigation, we evaluate whether there is reason to suspect that abuse of insider information has taken place. If there are grounds for suspecting that a crime has been committed, we will request a police investigation.

Market manipulation

Market manipulation means any inappropriate action taken with the intention to artificially affect – directly or indirectly – the demand, supply or the price of a financial instrument. Investigation of market manipulation most often commences if trading includes features that do not appear to be in line with usual trading practices.

In supervising trading, the FIN-FSA uses, among others things, information on transactions in financial instruments submitted to the Authority by investment service providers. The FIN-FSA’s framework for trade reporting is part of the pan-European data collection and data exchange framework for transactions in financial instruments.  

The FIN-FSA monitors the notification of short positions and we publish on our website short positions that exceed a threshold value.

For more information, see Short positions.

The objective of supervision of investment services and products is to promote the clarity and high quality of investor information on products and services and appropriate codes of conduct for service providers.

The FIN-FSA supervises activities of investment service providers, fund management companies and alternative investment fund managers, and processes the related authorisation and registration applications. In addition, we supervise information provided to investors on investment products as well as practices related to product development.

The objective of supervision of banking and insurance services and products is to promote the clarity and high quality of customer information and appropriate codes of conduct for service providers.

The FIN-FSA supervises the business practices of banks, insurance corporations, insurance agents, insurance brokers and payment institutions as well as the sales and marketing of their products and services, information provided to customers and the legality of terms and conditions of contract. In addition, we process insurance agents’ and brokers’ applications for registration and maintain a register of insurance intermediaries. We also participate in domestic and international regulatory and supervisory cooperation.

The Markets in Crypto-Assets (MiCA) Regulation (EU) 2023/1114 regulates:

• issuance of crypto-assets
• offering of crypto-assets to the public
• seeking of admission to trading of crypto-assets; and
• provision of crypto-asset services.

Crypto-assets are digital representations of value or of rights that can be transferred or stored using distributed ledger technology (DLT). Blockchains are one example of these technologies. The transfer and storage of crypto-assets is based on cryptographic encryption using public and private keys. In practice, the MiCA Regulation divides crypto-assets into two categories:

1. crypto-assets that aim to stabilise their value by referencing another value or right or a combination thereof; and
2. other crypto-assets.

The first category includes asset-referenced tokens (ARTs) and electronic money tokens (EMTs). An EMT is a crypto-asset that aims to stabilise its value by referencing one, and only one, official currency. An ART aims to maintain a stable value by referencing any another value or right. The reference for an ART can therefore be, for example, a combination of several currencies, i.e. a basket of currencies, but not only one official currency.

The second category includes all other crypto-assets. In particular, this means crypto-assets that do not aim to stabilise their value. The second category includes so-called utility tokens, which provide access to products or services offered by the issuer of the token.

Crypto-assets are neither financial instruments nor legal means of payment. They are, however, used as investment objects and for payment.