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What is the Market Abuse Regulation 2016?

Compliance Knowledge Base | Anti-Money Laundering

Posted by: India Wentworth Published: Thu, 06 Sep 2018 Last Reviewed: Thu, 06 Sep 2018
What is the Market Abuse Regulation 2016?

The UK's 2016 Market Abuse Regime (MAR) pushes for smooth management of the market and financial security. The approach of the MAR is to deal with the sorts of behaviour that negatively affects consumer confidence and to regulate the integrity and impartiality of the market as a whole. MARs define 'market abuse' behaviour as insider dealings, unlawful disclosure of confidential information, and market manipulation.

The regime brings about changes to do with the disclosure of inside information and transaction reports to establish a more uniform system, reduce complexities, and offer greater legal certainties for consumers. The aim is to create a market with greater communication and trust for all.

What does it entail?

2016 saw the new MAR introduced, replacing the previous market abuse directive entirely. A lot of the content remains the same, but the greatest alterations are that it extends the scope of subjects that it covers in terms of markets and products, as well as creating more regulations in procedure. The core aim for both is to get rid of actions that are stopping consumers from experiencing full market transparency so that there are no nasty surprises to follow.

Companies are required to immediately announce inside information (except under certain limited circumstances). They define 'inside information' as precise, confidential from the public to avoid a drop-in value and related to the company shares and financial details.

What MAR 2016 changed was to introduce more extensive record keeping in the event a decision is delayed. The company must also inform the Financial Conduct Authorities (FCA) of the reasons why the company delayed disclosure.

The regulation requires businesses to maintain insider lists of people working for them as well as the advisors that have access to inside information. The information on the insider list has been extended to include national identification numbers, personal telephone numbers and the precise time at which the person acquired the information.

What is the Market Abuse Regulation 2016?

Preparation is Key

MAR is relevant for anyone that is listed on the London Stock Exchange, this equates to around 2,600 companies from 60 countries, a figure that highlights the breadth of business that the MAR covers in day-to-day business life.

Preparation is everything to ensure a successful adoption of the new MAR provisions within your company:

Planning:

  • Ensure that you are fully briefed, and understand the changes being introduced by MAR
  • Put together a team of key people who need to be in the know about the changes (e.g. finance, investor relations, HR)

Policies and Procedures:

  • Review what policies need to be altered, this could be how you deal with disclosing information
  • Review your person discharging managerial responsibilities (PDMRs) and their list of people they're closely associated with (persons closely associated, otherwise known as PCAs)
  • Prepare your insider lists, abiding by the new format to make sure all the correct information is included

Training and Communication:

  • Keep in mind who needs to be informed about the changes
  • Supply a training programme including new policies and procedures so as to create a workforce with consistent understanding
  • Closely monitor trading to ensure that MAR has been understood and implemented

Board Review/approvals:

  • Make sure the board are involved in the regulations to maintain a strong level of communication
  • Always seek board approval when it comes to changing policies and procedures

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