On 6 April 2010 the Committee of European Securities Regulators (CESR) published a review of how securities regulators across Europe use options and discretions applied by CESR Members under the European Market Abuse Directive (MAD) regime. The review follows CESR’s discovery of divergence in terms of how national supervisors disclose information on supervisory measures or sanctions, the notification of decisions to delay the publication of inside information, the notification of dealings by persons discharging managerial responsibilities (PDMRs)and the content requirements of suspicious transaction reports.

Although CESR recognises that the use of options and discretions within MAD is legitimate, the review includes a number of recommendations and observations to increase convergence of supervisory practices in the EU. The review examines a number of topics, including the following:

  • Scope of MAD on Multilateral Trading Facilities (MTFs) - although CESR generally supports an extension of MAD to MTFs, it is not of the view that full MAD should be extended to all MTFs in general.
  • Notification of transactions by PDMRs and measures to ensure that the public is correctly informed.
  • Content of a Suspicious Transaction Report (STR) - CESR recommends that all Member States encourage the reporting of STRs on over-the-counter derivatives, where the underlying asset is an instrument admitted to trading on a regulated market, until such time as it becomes mandatory.
  • Supervisory and investigatory powers of national regulators.
  • Professional secrecy - CESR recommends that the notion of professional secrecy be protected by ensuring that there are strict and limited exemptions.
  • Disclosure by national regulators of measures taken or sanctions imposed.

The work conducted by CESR will be presented to the CESR-Pol, CESR’s policy group dealing with market abuse, for further considerations. The report will also be presented to the European Commission to serve as input into its ongoing review of MAD.

(CESR, Review Panel Report: Market Abuse Directive Options and Discretions 2009, 06.04.10)