Regulation 596/2014 on market abuse ("MAR"), and Directive 2014/57/EU on criminal sanctions for market abuse ("CS MAD") were published in the Official Journal of the EU on 12 June 2014 and apply as of 3rd July 2016. Together, MAR and CS MAD are known as MAD II.
The existing Market Abuse Directive is repealed as of the effective date of the new Regulation. MAR has direct effect in all Member States and does not require any further legislation for it to have effect in national laws.
MAR aims at enhancing market integrity and investor protection. To this end, MAR updates and strengthens the existing market abuse framework by (a) extending its scope to new markets and trading strategies and (b) introducing new requirements and standards. The definition of financial instruments in MAR refers to the definition under MIFID II, which is very broad.
In addition, MAR does not limit its scope to financial instruments traded on regulated markets ("Regulated Markets") in the EU, but extends its requirements to financial instruments listed or traded on Multilateral Trading Facilities ("MTFs") and Organised Trading Facilities ("OTFs") and emission allowances, and to issuers who have made application for securities to be listed or traded on such markets.
ESMA published its technical standards ("TS") in September 2015 and these standards prescribe the detail of how MAR must be applied in all Member States. Further guidance will be provided by ESMA and relevant competent authorities over time.
For the purposes of this memorandum, we have focused on the impact of MAD II on investment funds and issuers of debt securities which are listed on the Irish Stock Exchange.
These changes will require issuers with securities listed on Regulated Markets, MTFs and OTFs in the EU, including the Main Securities Market ("MSM"), Global Exchange Market ("GEM") and Enterprise Securities Market ("ESM") of the Irish Stock Exchange, to carefully review the obligations under MAR and to adopt policies and procedures to ensure compliance with the new regulations before the 3rd July 2016 deadline.
The New European Market Abuse Regime
Expansion of Scope1
The scope of the market abuse framework has been extended to include MTFs and OTFs. MAR also covers trading on other financial instruments outside of those markets, whose price is dependent on the price of a financial instrument traded on a prescribed regulated market, MTF or OTF (e.g. contracts for difference and credit default swaps)2.
Notifications and List of Financial Instruments3
Competent authorities will be notified by exchanges, MTFs and OTFs of all financial instruments trading on their venue and all applications to list and delistings. Competent authorities will transmit such notifications to ESMA without delay and ESMA will publish this list of financial instruments, including identifiers, immediately upon receipt.
Exemption for Buy-Bank Programmes and Stabilization4
The prohibition on insider dealing and market manipulation will not apply to trading in own shares in buy-back programs or trading in securities for the stabilization of securities when certain conditions set down in MAR are met.
The definition of what constitutes inside information has been amended as follows6:
"information of a precise nature, which has not been made public, relating directly or indirectly to one or more issuers or to one or more financial instruments, and...