The Market Abuse Regulation (MAR) was published in the Official Journal of the EU in June 2014. It will update the civil market abuse framework formerly established by the Market Abuse Directive and applies in Member States from 3 July 2016.
In the UK HM Treasury is preparing secondary legislation that will repeal or modify existing domestic law, where it conflicts with MAR, to meet the UK’s amended obligations under the new regime. The secondary legislation will also cover certain new obligations under MAR that are not covered by the current market abuse regime, such as the requirement for employers to have internal procedures for employees to report infringements of MAR.
The FCA has now published Consultation Paper 15/35: Policy proposals and Handbook changes related to the implementation of the Market Abuse Regulation (CP15/35). In CP15/35 the FCA sets out its proposals for the necessary changes to its Handbook required to implement MAR.
Importantly, from 3 July 2016 the principal legal requirements relating to market abuse will be set out in MAR and its implementing measures. The FCA proposes that its updated Handbook will provide guidance on, and signposts to, MAR where it determines that it is appropriate following the consultation on CP15/35. However, the FCA adds that the Handbook should not be regarded as the source of all provisions relating to market abuse. It adds that from 3 July 2016 those persons in scope of MAR should be aware of, and will need to comply with, all of MAR (including the implementing measures) and any relevant guidelines issued by the European Securities and Markets Authority.
CP15/35 is broadly divided into the following:
- chapter 2 sets out alternative options for implementing the two areas where national competent authorities are given discretion, i.e. Article 17 of MAR (Public disclosure of inside information) and Article 19 of MAR (Manager’s transaction), and how they may apply in the UK; and
- chapters 3 and 4 concern the changes that will be necessary to update the UK’s existing domestic regime to ensure compliance with MAR. This will include deleting provisions of the FCA Handbook where MAR contains an equivalent provision. The FCA propose to retain in its Handbook any existing guidance that is compatible with MAR and provide signposting to the relevant EU legislation.
The deadline for comments to CP15/35 is 4 February 2016. The FCA intends to publish its final Handbook provision in a policy statement in Spring 2016.
The proposals in CP15/35 only relate to the changes to the UK’s civil regime regarding market abuse. They do not cover the UK criminal market abuse regime as set out in Part 5 of the Criminal Justice Act 1993 and Part 7 of the Financial Services Act 2012.
The FCA also states that it intends to consult in the next few months on a modification to current guidance in the Disclosure and Transparency Rules for delaying disclosure of inside information. It also states that it will be consulting separately on its approach to implementing MiFID II giving the example of the framework for requirements on the production and dissemination of investment research which is currently set out in COBS 12. The FCA has not proposed any change to the Decision Procedures and Penalties sourcebook and the Enforcement Guide. Any proposed changes to these will be covered by a further consultation.