MAR: In force from 3 July 2016

CHALLENGES AND PROSPECTS

The new Market Abuse Regulation will enter into force soon, affecting financial market participants across Europe. Is your company ready?

Cologne, 1 March 2016 – The new Market Abuse Regulation (MAR) will enter into force on virtually all capital markets across the European Union on 3 July 2016. The new rules are designed to further harmonise and strengthen the legal framework underpinning the integrity of the market and the protection of investors. The advent of MAR will have a decisive impact on issuers whose financial instruments are traded in the open market or over the counter. Until now, this market used to be subject only to the prohibition of insider trading and market manipulation. When the MAR comes into force, open market participants - including bond issuers - will be obliged to disclose relevant news on an ad-hoc basis, to announce directors’ dealings, to maintain an insider list and to document the details of market soundings to the extent that the financial instruments are traded at the initiative of the issuer. Compliance with the MAR is mandatory from the moment an application is filed for the registration of a financial instrument.

Here is an overview of the areas of application:

• Financial instruments admitted to trading in a regulated market or instruments for which a respective application has been filed;
• Financial instruments traded in an organised trading facility (OTF);
• Financial instruments traded in a multilateral trading facility (MTF, over the counter) or instruments for which a respective application has been filed;
• Financial instruments which do not come under the above categories but whose price or value depends on, or influences, the price or value of a financial instrument which comes under one of the above categories; examples include credit default swaps (CDS) and contracts for difference (CFD).


The coming into force of the MAR will result in significant new duties and obligations for issuers. These will include the implementation of standardised processes and the installation of a comprehensive compliance system. In addition, it will be necessary to define procedural standards and their documentation for reporting lines, disclosures, documentation as well as for the presentation of information to the Managing Board and the Supervisory Board. The new MAR means that companies (legal entities) as well as board members and their close confidants are exposed to elevated liability risks. This is why in particular those capital market participants who face the need to comply with capital market requirements of this scope and complexity for the first time are well advised to start adjusting their organisational structures to the new regime in good time.