The EU Market Abuse Regulation (MAR) came into force on 3rd July 2016, entirely replacing the outgoing Market Abuse Directive, with the intention of expanding and developing the existing market abuse regulations and establishing a more uniform regime across all member states to reduce complexity while maximising legal certainty.
While there are many close similarities between the content under MAR and the previous legal requirements, the former provides greater scope in terms of markets and products, alongside the introduction of more stringent procedural regulations.
The MAR’s core objectives, in common with those of the Market Abuse Directive, are the outlawing of actions that prevent full and proper market transparency, as is fundamental to the sound operation of the financial markets.
What is MAR’s scope?
MAR is applicable to financial instruments admitted to trading on EU regulated markets, multilateral trading facilities, organised trading facilities and other financial instruments such as credit default swaps or contracts for difference.
This brings not only companies listed on the London Stock Exchange under the provisions of MAR, but also specifically AIM companies, given that they fall within the definition of a multilateral trading facility.
For the purposes of MAR, market abuse is defined as encompassing insider dealing, market manipulation and the unlawful disclosure of insider information. It is in such areas as inside information, insider lists, dealing in company securities, closed periods and market soundings where MAR has made its most notable changes.
How are companies required to respond to MAR?
A company’s successful adoption of the latest MAR provisions require strong planning, including ensuring that the company is fully briefed on the final changes that MAR has introduced, as well as that a team of people has been assembled with involvement or awareness of the changes such as investor relations, finance or HR.
It is as part of a company’s preparations for and adoption of MAR that company policies and procedures will need to be reviewed to determine those that may require amendment. Training and communication will also be key, with companies needing to consider who will be informed about or trained in the changes, and how this will be carried out.
The company board will also need to be briefed on any changes that will have to be carried out as a result of MAR, with board approval obtained for amended policies and procedures.
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