Market Abuse Regulation (MAR)

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 for insider dealing/market manipulation, and to align international interpretations of MAD into a harmonised approach known as CSMAD or MAD II. The Market Abuse Regulation (MAR) came into effect on 3 July 2016.

MAR sought to enhance and harmonise the EU regime on market abuse. It increased the scope of existing offences; introduced new offences such as attempted insider dealing, manipulation of benchmarks and commodities; and enhanced requirements on firms operating in EU financial markets.

MAR applies directly in the UK and in each EU member state without requiring states to enact laws that implement MAR's provisions. The Criminal Sanctions for Market Abuse (CSMAD or MAD II) requires the UK and each EU 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 European financial markets.

MAR affects all market participants 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 
  

MAR built on, and extended in scope, the market abuse framework laid out in the Market Abuse Directive (MAD). It applies to more financial instruments and markets, and therefore a greater number of firms and trading venues are in scope.

MAR covers:

• Insider information
• Market manipulation
• Attempted market manipulation
• Disclosure of inside information
• Insiders' lists
• Disclosure of managers’ deals
• Suspicious transaction reporting
• Research disclosure

Additional changes under MAR

• 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