Market Abuse (MAD II/MAR)

MAD II/MAR introduces amendments to the original Market Abuse Directive of 2003. The objective of the new rules is to assure market integrity. These amendments were proposed by the EC in 2012 and comprise a directive (MAD II) that criminalizes insider dealing and market manipulation, and a separate market abuse regulation (MAR) that addresses the issues of inside information and market abuse. Both the directive and the regulation have been in force since 3 July 2016. However, the directive, MAD, is not in scope of all EU member states.

MAR updates and strengthens the existing market abuse framework by extending its scope to new financial products (e.g. commodity derivatives and emission allowances), markets and trading strategies and by introducing requirements for topics such as market soundings and benchmarks.

 

 

2019
2020
2021
2022
2023
2024
4
1
Implementation / enforcement 10/2008 - 10/2011
2
Discussion / consultation 10/2011 - 06/2014
3
Implementation / enforcement 06/2014 - 07/2016
4
In effect 07/2016 -

STATUS
MADII / MAR measures apply from 3 July 2016

Since 3 July 2016 ESMA has published about 20 articles. The majority of them provides more guidance for and detailed information about Market Abuse topics such as: accepted market practices, disclosure of inside information .

In addition to meeting enhanced guidelines and Q&As, firms continue to improve their governance, processes and data for market abuse surveillance purposes. The surveillance rule based obligations require the handling of large volumes of orders and transactions, the identification of patterns in these large sets of data points.

When implementing MAD II/MAR, it is important to consider the related requirements in MiFID 11/MiFIR. Ideally, a regulatory change program maps the requirements across inter-related rules such as MiFID, MAR. PRllPs KID and SFTR (Securities Financing Transactions Regulation). There are synergies that need to be identified and worked through. Failing to do so risks ineffective and inefficient implementation.


Further information:
European Commission: Market Abuse
Compact: Heads or tails: market surveillance and market abuse

author
Rob Voster Senior Manager
Categories: Financial Market Organisation