New market abuse legislation - is your company ready?

 

 

Did you know that additional measures are being put in place to prevent market abuse? From July 2016, the current legislation will expand in control and in scope. These changes could have an impact on your company’s governance framework – have you taken the necessary steps to comply?

 

In just a few short months, the new MAR (Market Abuse Regulation) will take effect. This follows on from a review of the current regulation that took place after the financial crisis, in which the European Commission proposed an updated framework for monitoring market manipulation and insider dealing.

 

Here is a summary of some the main areas that may need to be addressed:

  • The MAR, as it currently stands, only applies to financial instruments on ‘regulated markets.’ The new rules will now cover all listed companies – this includes AIM-listed firms, who currently do not have to comply with the same market abuse laws.
  • Clear strategies will be put in place to prohibit abusive high-frequency trading systems.
  • Market soundings will now additionally be regulated in the form of tighter record-keeping requirements.
  • The new legislation additionally outlines an extended obligation to report suspicious transactions, and will now include an obligation to report suspicious orders.

 

But what does it mean for your company? 

 

The main recurring undercurrents in the new legislation are a heavy emphasis on individual accountability and a notable increase in scope. The new regulations will be rolled out in the hope of identifying the most relevant causes of market abuse from a broader range of issuers.

 

If your company is caught in the newly-expanded scope of the market abuse legislation (this includes all AIM-listed companies), reactive measures will be pivotal in sustaining an optimal governance framework. These reactive measures could include a revamped governance/compliance structure, the need for additional software for the upkeep of insider lists, or staff training on the additional procedures that need to be adhered to in complying with the new legislation. A modified system will prove crucial. 

 

For companies already under the directive of the previous legislature, procedures need to be implemented in order to acknowledge the tighter monitors on market abuse. These will include new steps in disclosing insider information, observing of director transactions, and training of directors in disclosing their share dealings.

 

We are in touch with a number of Consultants who can assist with ensuring your company complies with July’s regulatory changes, so do get in contact on 020 3589 0333 if you would like some guidance. 

27 January 2016

 

 

written by Jon Moores
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