The Market Abuse Regulation became law on 3 July 2016 replacing the previous Market Abuse Directive across the EU. For more information about the impact in the UK, see our client briefing note, here.
Despite the Regulation having direct effect, it relies on a number of subordinate texts and guidance. In addition, UK laws and regulations have had to be amended so as to be consistent with it.
EU legislation and guidance
The primary legislation is contained in Regulation 596/2014 (the Regulation or MAR). However, this is supplemented by a number of delegated acts (secondary level legislation), most of which take the form of Technical Standards. These have been made avaialble in phases since the Regulation itself was published. Most have now been published and became law on 3 July 2016 together with the Regulation. To see the current state of play as regards MAR Technical Standards (and to access copies of them), click here.
Despite most Technical Standards now being available, important guidance remains available only in draft format. Primarily, this concerns the guidance that the European Securities and Markets Authority (ESMA) is tasked with publishing in respect of persons receiving market soundings, and the legitimate interests of issuers when delaying disclosure of inside information and when such delay may mislead the public. To see the drafts, click here.
Shortly before the Regulation became law, it was amended via two separate Regulations - 2016/1033 and 2016/1011. The first of these postpones the date on which certain MAR provisions come into force. The provisions are those relating to organised trading facilities (OTFs), small and medium-sized enterprise (SME) growth markets, and emission allowances or auctioned products based on them. As these concepts are derived from MIFID II, the parts of the Regulation that refer to them will not become law until the date that MIFID II comes into effect. This was recently delayed from 3 January 2017 to 3 January 2018. MAR has therefore been amended to reflect this.
The second regulation relates to indices used as benchmarks in financial instruments and financial contracts or to measure the performance of investment funds and also amends, amongst other things, MAR - primarily Article 19 (manager's transactions). The amendment creates certain exceptions to the PDMR reporting obligation in respect of financial instruments linked to shares or debt instruments of the issuer.
UK laws and regulations
As MAR is an EU Regulation it has direct effect in each EU member state. Therefore, except in a very few instances where member states were permitted some flexibility, the UK did not need to enact or amend legislation to implement it. Nonetheless, in order to ensure that the UK's laws and regulations did not conflict with MAR, they had to be reviewed and amended.
On 30 June 2016, the Financial Services and Markets Act 2000 (Market Abuse) Regulations 2016 were published. Primarily, these:
- designate the FCA as the competent authority in the UK for the purposes of MAR;
- repeal the provisions in the Financial Services and Markets Act 2000 (“FSMA”) implementing the previous regime, which are mostly found in Part 6 (official listing) and 8 (penalties for market abuse) of FSMA;
- amend FSMA and other UK legislation to create the new supervisory, investigative and sanctioning powers required by MAR and ensure that UK legislation is compatible with MAR; and
- confer new duties on the FCA with regard to the reporting of contraventions contained in MAR.
From a regulatory perspective, both the FCA Handbook and AIM rules for companies have been amended to ensure compatibility with MAR. To see an updated copy of the Handbook, click here, and for the AIM rules, click here.
A key change in respect of the FCA Handbook is the deletion of the Model Code. As part of its review of the Handbook, the FCA originally proposed replacing the Model Code with guidance for companies to use when creating internal procedures for persons discharging managerial responsibilities (PDMRs) applying for clearance to deal. However, on reflection, the FCA concluded that implementing this proposal would be unnecessarily onerous on issuers and PDMRs and would not provide the legal certainty needed by stakeholders. As a consequence, the FCA decided that the Model Code would be deleted and it therefore no longer forms part of the FCA Handbook. Nonetheless, the FCA noted that it would support development of industry-led codes of best practice, and, on 24 June 2016, a specimen dealing code and policy was published jointly by ICSA, the Quoted Companies Alliance (QCA), and the GC100 – to obtain a copy, click here.
The FCA's knowledge base is also being updated. The sixteenth edition of Primary Market Bulletin (PMB 16) focuses on the FCA's consultation on proposed amendments to, and deletions of, various Technical Notes that are necessary due to the changes introduced under MAR. It also contains the FCA's clarificatory statement that, subject to any conflicting view from ESMA, it will treat an announcement of preliminary results as ending a closed period under MAR. To see a copy of PMB 16, click here.