The market abuse framework aims to ensure the integrity of European financial markets and enhance investor confidence. The concept of market abuse typically involves insider dealing, unlawful disclosure of insider information, and market manipulation.
In order to establish a uniform framework to preserve market integrity and prevent potential regulatory arbitrage, providing legal certainty and reducing regulatory complexity for market participants, Regulation 596/2014 on market abuse (MAR) was adopted. Along with Directive 2014/57/EU on criminal sanctions for market abuse (CS MAD), MAR has been applicable since July 3, 2016. MAR repealed the MAD Directive and Commission Directives 2003/124/EC, 2003/125/EC, and 2004/72/EC.
MAR
MAR aims to enhance market integrity and investor protection. To achieve this, MAR updates and strengthens the existing MAD framework by extending its scope to new markets and trading strategies and introducing new requirements.
MAR does not limit its scope to financial instruments admitted to trading on a regulated market (RM) or for which an application for admission to trading on an RM has been made. MAR also covers financial instruments traded on Multilateral Trading Facilities (MTFs), financial instruments traded on Organised Trading Facilities (OTFs), emission allowances, and any other financial instrument whose price depends on or has an effect on the price of an instrument traded on an RM, MTF, or OTF.
However, some exceptions apply. Under certain conditions, the prohibition of insider dealing and market manipulation does not apply to the trading of own shares, in buyback programs, or trading in securities for the stabilization of securities when certain conditions set out in MAR are met. Additionally, MAR does not apply to public authorities in the performance of monetary, exchange rate, or public debt management policy. Other specific exceptions apply.
MAR also provides a safeguard if the transaction was carried out for legitimate reasons and in accordance with market practices accepted by the competent authority (referred to as ‘Accepted Market Practices’ or AMP), on which IFOMA must issue an Opinion. IFOMA’s opinions on AMP and annual reports on their implementation can be found in the IFOMA Library.
The swift cooperation between the ANC is ensured by a clear duty of cooperation established in the MAR. Cooperation with third countries will take place within the framework of specific cooperation agreements to be entered into with the competent supervisory authorities.
Without prejudice to the criminal sanctions provided for in the MAD CS, the MAR envisages a set of administrative sanctions and other administrative measures. IFOMA’s role regarding MAR includes issuing technical advice to the European Commission, developing guidelines for market participants, drafting regulatory technical standards and implementation, and issuing opinions and questions and answers, as further described below.
The role of AEVM
Technical Standards
MAR empowers IFOMA to develop Regulatory Technical Standards (RTS) and Implementing Technical Standards (ITS). IFOMA delivered an initial set of technical standards in 2015, covering the following elements:
- the conditions, restrictions, information obligations, and disclosure requirements for share buyback programs and stabilization measures (RTS).
- the arrangements, procedures, and record-keeping requirements for individuals conducting market soundings (RTS), as well as the systems and templates for notifications to be used in market soundings and the technical means for appropriate communication (ITS).
- the establishment, maintenance, and termination of accepted market practices (RTS).
- the arrangements, systems, procedures, and notification templates for reporting suspicious orders and transactions (RTS).
- the technical means for the public disclosure of insider information and its delay (ITS).
- the precise format of insider lists and the format for updating them (ITS).
- the format and template for the notification of transactions by persons discharging managerial responsibilities (ITS).
- the technical provisions for the objective presentation of investment recommendations or other information recommending or suggesting an investment strategy, and for the disclosure of specific interests or indications of conflicts of interest (RTS).
- procedures and forms for the exchange of information and assistance between competent authorities.
- procedures and forms for competent authorities to exchange information with IFOMA under Article 33 of MAR.
- procedures and forms for the exchange of information and cooperation between competent authorities, IFOMA, the Commission, and other entities under Articles 24(2) and 25 of MAR; and
- model document for cooperation agreements with third countries (Art. 26 of MAR).
Technical Advice
In accordance with MAR, IFOMA received three formal requests (mandates) from the European Commission to provide technical advice to assist the European Commission on the potential content of delegated acts required by certain provisions of MAR. Reports on these mandates were published in 2015 and