EU Market Abuse Regulation (MAR)

MAR was created by the European Union to keep pace with financial market developments, to create capital markets transparency and to protect investors within all member states.

MAR applies to:

• issuers of financial instruments on regulated markets (for example, equities or bonds)
• issuers of MTFs (Multilateral Trading Facilities)
• issuers of OTFs (Organised Trading Facilities)

Derivatives which are being traded on these trade venues are also subject to MAR.

Disclosure of Inside Information (particularly Art. 17 MAR)

Under MAR, disclosure of inside information becomes a legal requirement for issuers of all financial instruments covered by MAR. In the past, this requirement was limited to regulated markets. Now, issuers must disclose inside information and distribute it throughout Europe to regulatory bodies. This must then be available on the issuer’s website for 5 years. In addition, this information must be sent to the national financial authority (e.g. the BaFin), and in some cases, to the trading venue and to the national Officially Appointed Mechanism (e.g. Unternehmensregister).

Managers’ Transactions (particularly Art. 19 MAR)

Persons Discharging Managerial Responsibilities (PDMR) and individuals closely associated with them (e.g. spouses) must notify the issuer of relevant personal transactions they undertake involving the issuer’s financial instruments. The obligation to disclose Managers‘ Transactions is now extended to financial instruments traded on OTC. It is key to note a reduced notification period of three business days. This disclosure requirement also affects trading with derivatives and debt securities. An announcement by the issuer must be distributed throughout Europe, sent to the relevant financial authority, and also stored in the OAM (Officially Appointed Mechanism). Managers’ Transactions announcements must now also contain the Legal Entity Identifier (LEI code) of the issuer. In addition, issuers must compile a list of all persons bound by Directors’ Dealings (including closely-associated persons).

Issuers and everyone acting on their behalf (e.g. law firms) must draw up insider lists. The lists must include every person who has temporary or permanent access to inside information. This list must be continually updated and insiders must be officially informed of their obligations.

In addition to new obligations, sanctions and penalties have increased under MAR. For example, market manipulation is no longer considered the only criminal offence. Simply attempting a market manipulation is now also considered a crime. Sanctions for violating disclosure requirements and insider laws have also been tightened considerably.

MAR non-compliance also results in the regulator “naming and shaming”: in the future, all sanctions, the type of offence committed, as well as the identity of the person in question, will be published on the website of the responsible national authority for 5 years.

Violation of market manipulation or insider law

Violation of disclosure obligations regarding inside information