On 3 October 2019, the European and Securities Markets Authority (ESMA) published a consultation paper on the Market Abuse Regulation (MAR) review report. Article 38 of MAR requires the European Commission (Commission) to present a report to the European Parliament and the Council of the European Union to assess various provisions of MAR. In this update, we focus on ESMA’s comments in relation to spot FX contracts, inside information and benchmarks.

Spot FX Contracts

Spot FX contracts are not currently within the scope of MAR. The Commission has requested ESMA’s input on whether there is a need for the spot FX market to be included in the MAR regime. Although ESMA has identified some benefits to including this market within the MAR regime, it also notes that the characteristics of the spot FX market would make it difficult to apply the existing MAR framework and requirements. In particular, this is because Member State national competent authorities (NCAs) do not have the ability to obtain information about the spot FX market for monitoring and surveillance purposes, and developing the processes to allow this would attract significant costs, as well as requiring the development of a data reporting and record keeping regime applicable to market participants.

Definition of “inside information”

ESMA is seeking market participants’ views on the definition of inside information and whether it is sufficient for combatting market abuse.

Inside information for commodity derivatives

ESMA is seeking market participants views on: (i) the effects of the difference between the definition of inside information for commodity derivatives and for financial instruments; and (ii) whether such difference is appropriate or necessary. In particular, ESMA is seeking views on whether and how the further requirement for the inside information on commodity derivatives to be expected or required to be published should be clarified.


NCAs have received suspicious transaction and order reports regarding behaviours relating to pre-hedging or anticipatory hedging practices. ESMA states that pre-hedging behaviour may create risks of potential insider dealing, as well as the risk of distorting competition and harming the client’s interests where there is competition between brokers. It may also create risks around managing conflicts of interest, client order handling rules and best execution rules. However, ESMA also understands that pre-hedging can provide benefits to the client, particularly in respect of offering better prices and avoiding impact or disruption to the market in the context of large orders. In order to understand this area better, ESMA is seeking views to learn more about what market abuse and/or conduct risks could arise from pre-hedging behaviours and what systems and controls firms have in place to address those risks.


MAR currently contains the prohibition against manipulating the calculation of a benchmark. The Benchmark Regulation (BMR) has since come into force and the query has arisen whether the MAR provisions in relation to benchmarks are compatible with the BMR. ESMA explains that the ultimate purpose of the BMR is to regulate any aspect related to the provision of benchmarks to ensure the accuracy, robustness and integrity of benchmarks and the benchmark determination process. However, the BMR does not contain any provisions in respect to the prohibition against the manipulation of a benchmark. ESMA concludes that MAR and the BMR are complementary regimes due to the difference in scope. ESMA also notes that although the definition of a benchmark is different between MAR and the BMR, both definitions cover “approximately the same universe of benchmarks”.

ESMA also proposes that MAR is amended to give NCAs the power to impose sanctions against: (i) administrators of; (ii) assessors within administrators of; (iii) supervised contributors to; and (iv) submitters within supervised contributors to benchmarks for (attempted) manipulation of benchmarks.

Other areas covered by the consultation paper include:

  • the definition of inside information with respect to “front running”;
  • buy-back programmes;
  • insider lists;
  • delayed disclosure of inside information;
  • the market sounding regime;
  • persons discharging managerial responsibilities;
  • market surveillance by national competent authorities; and
  • MAR and collective investment undertakings.

Next steps

ESMA will hold an open hearing on the consultation on 5 November 2019. The consultation closes on 29 November 2019. ESMA intends to submit its final report in Q1/2 2020.