As was the case under the previous market abuse regime, MAR imposes various obligations on persons discharging managerial responsibility (PDMRs) in listed companies and their dealings in the securities of the company which they are connected to.
Notification requirement
Powers to require information from issuers, PDMRs and persons closely associated to PDMRs
The Financial Services and Markets Act 2000 (Market Abuse) Regulations 2016 (the “regulations“) were passed to ensure that UK law was compatible with the Market Abuse Regulation (MAR), to give effect to those parts of MAR which required implementing legislation, and to ensure it is fully enforceable in the UK.
This issue of #MAR_bitesize considers the new power to require information from issuers, persons discharging managerial responsibilities within issuers (PDMRs), and persons closely associated to PDMRs under section 122A of FSMA.
The Financial Services and Markets Act 2000 (Market Abuse) Regulations 2016
On 29 June 2016, the Government adopted the Financial Services and Markets Act 2000 (Market Abuse) Regulations 2016 (the “regulations“). This left negligible time for Parliamentary scrutiny before they came into force with the Market Abuse Regulation (EU) 596/2014 (“MAR”) on 3 July 2016.
The purpose of the regulations was to amend UK law to ensure its compatibility with MAR, to give effect to those parts of MAR which required implementing legislation, and to ensure it is fully enforceable in the UK. The regulations amend the Financial Services and Markets Act 2000 (FSMA) and give the Financial Conduct Authority (“FCA”) new powers to:
Increased scope
The former Market Abuse Directive (MAD) imposed requirements designed to ensure the objective presentation of investment recommendations and the disclosure of interests and conflicts of interest on the part of producers or disseminators of such recommendations. However, the Market Abuse Regulation (MAR) has considerably expanded regulation of “investment recommendations” and other “information recommending or suggesting an investment strategy”:
Article 2(4) of MAR applies the "prohibitions and requirements" within MAR to behaviour that occurs both within the EU and in a third county. In other words, MAR is intended to have extra-territorial effect, capturing individuals and firms operating outside of the EU.
Under Article 16 of MAR, market operators and investment firms operating a trading venue1, and any person professionally arranging or executing transactions, should have in place arrangements, procedures and systems for the detection and reporting of orders and transactions suspected of constituting insider dealing, market manipulation or attempted insider dealing or market manipulation. The obligations to detect and report market abuse are not limited to investment firms under MiFID; they extend to UCITS management companies, AIF managers and other firms professionally engaged in trading on own account (proprietary traders) such as energy trading companies. Continue reading
On 3 July 2016, the EU Market Abuse Regulation (MAR) (EU 596/2014) replaced the Market Abuse Directive (MAD) and the current UK regimes for market abuse and inside information. To help guide you through the first six months under the new regime, we will be issuing fortnightly "bitesize" updates providing concise snapshots of a number of key practical areas of interest under MAR. This first "bitesize" update on MAR focuses on the impact that MAR will have on listed companies' decisions to delay the disclosure of inside information in the UK. Continue reading
With just under 5 weeks to go before the Market Abuse Regulation comes into application across the EU, the European Securities and Markets Authority (ESMA) on Monday clarified that the obligations to detect and report market abuse under Article 16(2) of MAR (and the implementing technical standards once they are finalised) apply not just to investment firms under MiFID, but also to UCITS management companies, AIF managers and firms professionally engaged in trading on own account (proprietary traders) such as energy trading companies.
This will be our last quarterly Market Abuse update before 3 July 2016, the date when both the new Market Abuse Regulation and the Criminal Sanctions (Market Abuse) Directive come into application across Europe. Some significant pieces of the regulatory jigsaw have yet to be slotted into place, so we have set out the current state of play in a little more detail. Both pieces of legislation have significant extra-territorial implications: in this briefing we highlight some quirks in the potential application of the criminal regime.
The advent of new regulation has not led to any significant let-up of regulators’ enforcement efforts, and this briefing also reviews some recent cases in the UK, the US and Australia.
Our full e-bulletin is available here.
The European Commission has published a request to ESMA for technical advice on implementing acts relating to the Market Abuse Regulation (MAR). The implementing acts are required to specify the procedures to enable reporting of actual or potential infringements of MAR to competent authorities. Continue reading
