In response to the discovery of a rogue trader at French bank Société Générale, the UK’s Financial Services Authority has published a newsletter which focuses on firms’ reviews of their systems and controls to prevent similar incidents in their shops.

The FSA says that since that the existence of a possible rogue trader at SG was revealed in late January, supervisors have spoken informally to some 50 of the largest trading banks in London. Many have already put in place reviews to identify and correct gaps that may exist in their trading controls, it reports.

The newsletter highlights the measures firms should consider when reviewing the systems and controls which protect them against ‘rogue trader’ risk. “In the current volatile market environment, with the risk of inappropriate practices quickly leading to significant losses, early discovery and remedial action are even more important than in more benign conditions,” it warns.

Among the measures it looks at: corporate culture, governance, technology precautions, and the quality of management information.

The FSA says it will continue to engage with firms on these issues over the coming months and will also maintain its current regulatory dialogue with international colleagues about this incident and the wider issues it raises.

Sally Dewar, FSA managing director of Wholesale and Institutional Markets, said, “We are encouraged that many firms in London with significant trading activities are working to satisfy themselves that their basic controls and governance surrounding trading, risk management and settlement are effective. But the risks remain, and we would urge firms to remain vigilant on unauthorised trading, especially in current market conditions.”