No Dodging the MAR Bullet
The EU’s Market Abuse Regulation is set to go into effect on July 3, and financial organizations should not expect an 11th-hour reprieve from regulators.
“The massive regulation due out this year around European transaction reporting, MiFID II, has been delayed a year, so I think a lot of US firms have gotten back to focusing on other projects and haven’t addressed it that much,” said Robert Grant, head of business development in the Americas at UnaVista, a London Stock Exchange Group company.
Earlier this year, European Commission officials determined that market centers and market participants would not have the necessary systems in place by the original deadline of January 3, 2017, so a postponement was necessary.
“Given the complexity of the technical challenges highlighted by ESMA, it makes sense to extend the deadline for MiFID II,” Jonathan Hill, commissioner for Financial Services, Financial Stability and Capital Markets Union, said in a February statement. “We will, therefore, give people another year to prepare properly and make the necessary changes to their systems.”
The MAR has a sharper focus and addresses insider trading, unlawful disclosure of insider information, and market manipulation — especially via electronic quote-stuffing, layering and ‘spoofing’ of orders — across the European Economic Area.
Financial instruments that trade on regulated markets, multilateral trading facilities, and organized trading facilities as well as instruments whose price or value depend on or effect on price or value of a financial instrument fall under MAR’s regulatory umbrella.
“Firms do not only have to monitor trades but also their orders under MAR and any changes to those orders,” said Grant. “That certainly is something that has not been required before.”
And European firms are not the only ones affected by the new regulation as the European Commission has invoked regulatory extra-territoriality for its new mandates.
The new rules will apply to market abuses that affect EEA exchanges or trading venues whether executed in or outside of the EEA by EEA and non-EEA entities.
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