On March 9, the European Commission adopted a delegated Regulation (and an accompanying Annex) in relation to the EU Market Abuse Regulation (MAR). The delegated Regulation sets out arrangements, systems and procedures and notification templates to be used for preventing, detecting and reporting abusive practices or suspicious orders or transactions under MAR (STOR requirements). As noted in the Corporate & Financial Weekly Digest edition of October 2, 2015, the European Securities and Markets Authority (ESMA) published a final report in September 2015 in regards to MAR, which contained several draft regulatory technical standards (RTS), including those related to STOR requirements.
The STOR requirements, contained in the delegated Regulation supplement Article 16 of MAR, require market operators and investment firms operating trading venues to have systems and procedures in place to prevent, detect and report suspicious orders or transactions. It also requires individuals who are professionally arranging or executing transactions to have systems and procedures in place to detect and report suspicious orders or transactions.
Notable requirements in the delegated Regulation include that:
- systems and procedures must “allow for the analysis, individually and comparatively” of “every transaction and order placed, modified, cancelled or rejected” and to produce alerts for further analysis;
- regular and comprehensive training is implemented for staff involved in the monitoring, detection and identification of orders and transactions that could constitute actual or attempted insider dealing and market manipulation, including staff that process orders and transactions; and
- reports of suspicious orders and transactions are made “without delay” once a reasonable suspicion has been formed in relation to a trading behavior, in accordance with the template in the Annex attached to the delegated Regulation (STOR template).
The delegated Regulation will be enacted 20 days following its publication in the Official Journal of the EU and is set to go into effect on July 3.