Under the new Market Abuse Regulation (MAR), set to come into force on 3 July 2016, the market abuse regime in the UK will be updated.
For more on the MAR updates generally see here. Whereas the previous Market Abuse Directive only applied to instruments admitted to a regulated market, MAR will apply to a number of different financial instruments including any admitted to multilateral trading platforms such as the Alternative Investment Market (AIM).
MAR sets out the Financial Conduct Authority (FCA) as the competent authority in relation to enforcing the provisions of MAR as implemented. However, as the market authority and as part of the overhaul of the current regime the London Stock Exchange (LSE) has issued guidance on the effect of MAR on the AIM Rules, in particular its impact on the rules of disclosure under Rule 11.
Rule 11 contains the general obligation on an AIM company to issue a public announcement via the regulatory information service of certain new market sensitive information. Should an AIM company develop a change in financial condition, sphere of activity, performance of business or expectation of performance then it must, without delay, issue a notification.
The AIM Rules have sat within a wider regulatory landscape for some time but the LSE acknowledge that retaining Rule 11 will mean AIM companies have obligations to two regulators. However, in terms of MAR, only the FCA has competent authority to conclude whether a company is compliant with the regime.
The LSE will work closely with the FCA on these matters and will conduct a market consultation should the AIM Rules require any change.
The dual regulation should not present much difficulty to the market as the FCA currently has regulatory powers over AIM companies in respect of the current market abuse regime. However, certain documents forming part of the admission process will need to be updated, such as share dealing codes and memoranda of directors' obligations. Nominated Advisers are recommended to familiarise themselves with the new MAR regime and its interaction with the AIM Rules prior to its coming into force on 3 July 2016.