Regulation (EU) 596/2014 on market abuse (MAR) and the EU Market Abuse Directive 2014/57/EU, which update the existing Market Abuse Directive 2003/6/EC, will come into effect on 3 July 2016.

This will have a number of implications for investment funds listed on the Main Securities Market (MSM) and the Global Exchange Market (GEM) of the Irish Stock Exchange.  The Central Bank will act as Competent Authority in respect of the implementation of MAR.

The aim of MAR is to establish a common regulatory framework on insider dealing, the unlawful disclosure of inside information, market manipulation and market abuse as well as measures to prevent market abuse to ensure the integrity of financial markets within the EU and to enhance investor protection and confidence in those markets.

The scope of the Market Abuse Directive was limited to financial instruments admitted to trading on a "Regulated Market" within the EU.  However, the scope of MAR is broader and applies to the following:

  • financial instruments admitted to trading on a regulated market or for which a request for admission to trading on a regulated market has been made;
  • financial instruments traded on a multilateral trading facility (MTF), admitted to trading on an MTF or for which a request for admission to trading on an MTF has been made;
  • financial instruments traded on an Organised Trading Facility.

This means that MAR will now apply to all securities listed on the MSM and will also apply to securities listed on GEM.

The revised regime expands on the requirements of the Market Abuse Directive 2003/6/EC and provides more detailed requirements in relation to the following:

  • Insider dealing;
  • Market manipulation;
  • Inside information and the disclosure of inside information;
  • Insider lists;
  • Managers’ transactions.

MAR also provides for "Market Soundings" which means that an issuer, a secondary offeror of a financial instrument and any third parties acting on their behalf will be permitted to communicate information, prior to the announcement of a transaction, in order to gauge the interest of potential investors in a possible transaction and the conditions relating to it, such as its potential size or pricing.  Market Soundings will only be acceptable under MAR provided that certain conditions are met and detailed records on the process must be maintained for a period of at least five years.