ESMA publishes responses received to consultation papers on market abuse (MAR)

ESMA’s Securities and Markets Stakeholder Group (SMSG) has responded to ESMA’s consultation on draft technical standards and possible delegated acts under the Market Abuse Regulation (MAR).

The Market Abuse Regulation (MAR) establishes a common regulatory framework on insider dealing, the unlawful disclosure of inside information and market manipulation to ensure the integrity of financial markets in the European Union and to enhance investor protection and confidence in those markets.

Key facts

•  SMSG stresses the importance of market soundings as a means of managing relations between issuers and investors but says some of ESMA’s proposals seem too complex and might have the effect of discouraging these soundings

• SMSG thinks that insider lists are an important tool for competent authorities when investigating market abuse and it welcomes the proposal to harmonize insider lists. However, it is worried about the extensive information ESMA wants insiders to provide

• SMSG has said that the current regime under the Market Abuse Directive and Directive 2003/125/EC has on the whole worked well but appreciates it is necessary to tighten some of the regime on investment recommendations. It also agrees with ESMA’s proposals to set stricter rules for qualified persons such as the disclosure of financial interests and conflicts of interest

• SMSG thinks that ESMA’s proposal on the disclosure of manager transactions is potentially too broad and not in line with the purpose of the law

Kinetic Partners’ perspective

At the British Bankers’ Association conference on market abuse held in October this year, the FCA’s Head of Market Monitoring, Patrick Spens, warned that while insider dealing and other forms of market abuse had “been seen in some circles as being a victimless crime or even a perk of working in the City,” this was not the case, and in fact “recently there has been growing recognition of the very serious damage to market confidence such offending can inflict”.

Two of the primary objectives of regulators globally are to protect and enhance market integrity and reduce financial crime through the detection, prevention and prosecution of market abuse, including insider dealing, market and benchmark manipulation, conflicts of interest and front running.

Globally, we are seeing examples of continued regulator enforcement for insider dealing and market manipulation which highlights the ongoing commitment of the regulators to protect and enhance market integrity, reduce financial crime and ensuring the proper and effective supervision of financial service providers and markets.

How can Kinetic Partners help?

Kinetic Partners has many years of experience covering all aspects of regulation. We tailor our reviews to each client’s needs and you are guaranteed to receive hands-on, friendly and personal attention from our team throughout your engagement with us.

Our services include:

•  Design and development of robust, best practice governance and control frameworks tailored to the business model and risk profile of each client

• Market Conduct Risk Assessments (MCRA) and regulatory gap analysis

• Peer group benchmarking across industry standards

• High level health-checks, quality assurance or deep dive reviews

• Regulatory investigations and regulatory commissioned reviews

• Design and implementation of remediation projects

• Development and delivery of bespoke training and procedural documentation