EU Market Abuse Regulation

Across Europe there are a number of regulations that harmonise rules on the prevention of market abuse. Here, we summarise the most important.

Market Abuse Directive II (MAD II)
The European Parliament voted to formally endorse the political agreement on MAD II on 20th December 2013. MAD II applies from 3rd July 2016. The UK and Irish governments have decided not to opt in to MAD II at the present time.

MAD II requires Member States to provide for harmonised criminal offences of insider dealing and market manipulation, and to impose maximum criminal penalties of not less than 4 and 2 years’ imprisonment respectively for the most serious market abuse offences. Member States must ensure that such behaviour, including the manipulation of benchmarks, is a criminal offence punishable with effective sanctions everywhere in Europe.

Market Abuse Regulation (MAR)
On 10th September 2013 the European Parliament voted to formally endorse the political agreement on MAR. MAR applies from 3rd July 2016. MAR will also apply in the UK and Ireland, regardless of whether or not the UK and Ireland endorse MAD II.

Parts of MAR are based on MAD I, which are transferred into a regulation in order to ensure a consistent application across European Member States. Amongst other things, MAR extends the scope to:

  • Over the counter (OTC) trading
  • High-frequency trading (HFT)
  • Further asset classes, such as commodities and related derivative markets
  • Explicitly ban the manipulation of benchmarks (such as LIBOR)

Regulation Energy Market Integrity and Transparency (REMIT)
In force since 28th December 2011, REMIT is an EU regulation aimed at increasing transparency and stability in the European energy markets whilst also combating insider trading and market manipulation. The EU Agency for the Cooperation of Energy Regulation (ACER) has been tasked with supervision and regulation in accordance with REMIT.

REMIT introduced:

  • Prohibition of insider trading (Article 3) and market manipulation (Article 5) in energy markets
  • Obligations on market participants to report wholesale energy market transactions (Article 8) and to publish insider information (Article 4)
  • Obligations on market participants to register with their national competent authority(ies) (Article 9)
  • Obligations on market participants to monitor for market abuse and insider trading (Article 15)
  • Last updated 18th July 2016

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