John Veale of Kangs Solicitors comments further upon the regulatory powers of the Financial Conduct Authority (FCA).
The Market Abuse Regulation (MAR) came into effect on 3rd July 2016 and is designed to increase market integrity and protect investors with the intent of making the securities markets more attractive for the raising of capital.
MAR in effect makes insider dealing, unlawful disclosure of inside information and market manipulation civil offences.
It gives the FCA powers and responsibilities for preventing and detecting market abuse on markets not previously covered by existing legislation/regulations.
MAR applies to:
- Financial instruments being traded on a regulated market or for which a request has been made to trade the instrument on a regulated market.
- Financial instruments traded on a multilateral trading facility (a self-regulated financial tradingvenue, this being an alternatives to the traditional stock exchanges that deals in securities) or for which a request has been made to trade the instrument on a multilateral trading facility.
- Financial instruments traded on an organised trading facility (a multilateral system, which is not a regulated market or multilateral trading facility that deals in trading of interests in bonds, structured finance product, emissions allowances or derivatives).
- Financial instruments not covered by the above but the price or value of which depends on or has an effect on the price of financial instruments detailed above.
European Securities and Market Authority (ESMA) Guidelines
ESMA is an independent EU Authority that contributes to safeguarding the stability of the EU’s financial system by enhancing the protection of investors and promoting stable and orderly financial markets.
ESMA issues various Guidelines in relation to the financial markets which are incorporated into MAR and include:
- information that is reasonably expected or required to be disclosed on relevant commodity derivatives and spot markets.
- on the delay of the disclosure of inside information and when any delay is likely to mislead the public.
- on market soundings (information provided prior to the announcement of a transaction, in order to gauge the interest of potential investors in it, and the conditions relating to it such as its potential size or pricing to one or more potential investors).
Offences Covered by MAR | Kangs Solicitors for FCA Investigations
- MAR defines inside information and extends it to cover spot commodity contracts (contractfor buying or selling a commodity, security or currency for immediate settlement on a spot date, which is normally two business days after the trade date).
- MAR defines insider dealing and unlawful disclosure and clarifies that the use of inside information used to amend or cancel an existing order amounts to insider dealing.
- MAR introduces a framework to enable legitimate disclosure of inside information for market soundings (see above).
- MAR prohibits market manipulation and extends its definition to include manipulation in relation to bench marks and spot commodity contracts.
Exemption from the Offences
As with Criminal Justice Act 1993 and Financial Services Act 2012 offences there are defences/exemptions relating to buy back programmes and market stabilisation measures.
The FCA can impose unlimited fines.
How Can We Help? | Kangs Regulatory Team
If you need help in relation to any FCA investigation or prosecution, please do not hesitate to contact our team through any of the following: