Market Abuse Regulation (MAR)
Background and History
The implementation of the Market Abuse Directive (MAD) in 2005 resulted in an EU-wide market abuse regime and a framework for establishing a proper flow of information to the market. It is designed to improve confidence in the integrity of the integrated European market and greater cross-border cooperation.
In October 2011, the European Commission (EC) issued a proposal which aimed to introduce common criminal sanctions of insider dealing/market manipulation and to align international interpretations of MAD into a harmonised approach known as CSMAD or MAD II. In 2014, the Market Abuse Regulation (MAR) and the Directive on Criminal Sanctions for Market Abuse were published with an implementation date of 3 July 2016.
MAR seeks to enhance and harmonise the EU regime on market abuse. It will increase the scope of existing offences and introduce new offences such as attempted insider dealing, manipulation of benchmarks and commodities and enhance requirements on firms operating in the EU financial markets.
MAR applies directly in each EU member state without requiring states to produce laws that implement MAR's provisions. The Criminal Sanctions for Market Abuse (CSMAD or MAD II) requires each member state to implement legislation to ensure that market abuse is a criminal offence which can be effectively punished.
Together, they seek to improve confidence in the integrity of the European financial markets.
When do you need to comply with MAR?
The Market Abuse Regulation came into effect on the 3rd July 2016.
Who will MAR affect?
MAR affects any market participant trading the following financial instruments:
- Any financial instruments admitted to trading on a regulated market or where a request for admission to trading on a regulated market has been made.
- Any financial instruments traded on a multilateral trading facility (MTF), admitted to trading on an MTF, or where a request for admission to trading on an MTF has been made.
- Any financial instruments traded on an organised trading facility (OTF).
- Any Financial instruments not covered in the above points, but which the price depends on, or influences.
What are the key points of MAR?
The new MAR regulation builds on, and extends in scope, the market abuse framework laid out in the Market Abuse Directive (MAD). Its reach extends to more financial instruments and markets, which in turn means more firms and trading venues will be caught.
Key points include:
- Insider information
- Market manipulation
- Attempted Market Manipulation
- Disclosure of inside information
- Insiders' lists
- Disclosure of managers’ deals
- Suspicious transaction reporting
- Research disclosure
MAR brings changes regarding
- An extension of the definitions of insider dealing and market manipulation and the scope of the market abuse framework to any financial instrument admitted to trading on MTF, OTF and OTC. Inside information definitions will be extended to include commodity derivatives. Market manipulation will be extended to cover cross market manipulation. For example, where derivative markets are used to affect spot markets.
- An amended regime for SMEs with regards to their dealing obligations and disclosure. Insider information is required to be disclosed in a modified and more simple market-specific way. The proposal also clarifies managers’ transactions reporting requirements.
- The introduction of an obligation for exchange of information and cooperation between financial and commodity regulators. The proposal includes suspicious transaction reporting to order and OTC transactions. Regulators and competent authorities will be granted access to a variety of private communications/documents where there is suspicion of insider dealing. The offence of Attempted Market Manipulation will also be introduced.
How can UnaVista help you comply with MAR?
UnaVista provides regular CPD-certified and CISI-endorsed MAR regulatory training to help firms understand and comply with MAR. Our regulatory training courses are available to clients and non-clients wishing to improve their understanding of the regulation and how to comply with it. Participants can leverage our knowledge of transaction reporting to meet the expanding requirements of MAR.
Firms can also meet regulatory demands with access to external data feeds with report forms and templates by using the LSEG’s own data sources such as SEDOL Masterfile, FTSE and Regulatory News Service (RNS) to prevent cross-market manipulation accusations.
Introducing UnaVista’s Analytics
Analytics is a sophisticated and cost-effective way for firms to comply with some aspects of MAR. Firms can monitor potential market abuse by leveraging the transactional data they already report to UnaVista. Firms using UnaVista’s ARM to fulfil their MiFIR transaction reporting obligation will have access to the solution without needing to send additional data. The solution will eventually be expanded to cover other regulations including EMIR and SFTR.
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