The Committee of European Securities Regulators (CESR) has published a review panel report on how securities regulators across Europe use options and discretions applied under the European Market Abuse Directive regime (MAD regime), which is made up of the Market Abuse Directive (MAD) and its Level 2 implementing measures.

Overall, the review found some divergence in the application of the MAD regime, but a greater level of divergence for Multilateral Trading Facilities (MTFs). Whilst four CESR members found that the full set of applicable MAD rules should be applied as a general rule to MTFs, many members only apply part of the MAD regime to all, or some, of their MTFs. However, the report shows that the majority of CESR members (20 out of 29) apply some of the MAD regime to at least some of their MTFs.

The review also found variations in the content required of suspicious transaction reports (STRs). This concerned, for example, whether additional guidance had been issued, how the materiality thresholds have been set, and the extent to which OTC derivatives are covered in such STR reports.

The report contains a number of recommendations for further work by CESR to increase convergence. This includes further work on the extension of the MAD regime to MTFs, once the European Commission has addressed this issue in the MAD review. CESR’s review panel has also recommended that all Member States encourage the reporting of STRs on OTC derivatives, where the underlying asset is an instrument admitted to trading on a regulated market, until such time as it becomes mandatory due to changes to the MAD.

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

View Review Panel Report - MAD options and discretions, 29 March 2009