The new EU market abuse and inside information regime – ESMA consults on draft implementing measures

ESMA has published two Consultation Papers setting out proposed draft secondary measures under the Market Abuse Regulation ("MAR").  These ESMA Consultation Papers follow the Discussion Paper  issued last November, which set out initial views on the policy approach to implementing MAR, and covered all the proposed MAR implementing measures, namely technical advice to the European Commission on delegated acts, technical standards and Guidelines.

Some of the responses to the consultation of the November 2013 Discussion Paper are summarised in these latest consultation papers, which deal only with technical advice and technical standards. Both consultations close on 15 October 2014.   ESMA guidelines will be consulted on at a later date. 

The first ESMA paper (ESMA 2014/808) seeks comments on the technical advice that ESMA proposes to give to the European Commission on a number of possible delegated acts concerning the Regulation, relating to:

• the specification of the indicators of market manipulation
• the establishment of a minimum threshold of carbon dioxide equivalent and a minimum threshold of rated thermal input for the purposes of exemption with respect to the public disclosure of inside information
• the specification of the competent authority for the notification with respect to the public disclosure of inside information
• the specification of the characteristics of a manager’s transaction which trigger the notification duty, and specification of the circumstances under which trading during a closed period may be permitted by the issuer
• the specification of procedures to enable reporting of actual or potential infringements of MAR.

The second ESMA paper (ESMA 2014/ 809) sets out draft implementing technical standards in respect of:

• Buy-backs and stabilisation: the conditions for buy-back programmes and stabilisation measures
• Market soundings
  • Proposed standards prior to conducting a market sounding
  • Timing of market soundings
  • Obtaining potential investor's agreement
  • Record-keeping requirements imposed on the Disclosing Market Participant (DMP)
  • The DMP's internal processes and controls
  • Cleansing
• Accepted Market Practices (AMPs)
  • Status of firms that can perform an AMP
  • Process and requirements to establish, maintain and terminate an AMP
  • Procedure and requirements to establish, maintain, terminate or modify conditions for the acceptance of a market practice
• Suspicious transaction and order reporting (STOR)
  • Reporting obligations
  • Level of suspicion required
  • Detection
  • Content of STORs
  • Template
  • Record keeping
• Technical means for public disclosure of inside information and delays
  • Means for appropriate disclosure of inside information
  • Technical means for delaying disclosure of inside information
• Insider Lists
  • Format of insider lists
  • Language of the insider list
  • Procedure for updating insider lists
  • SME Growth markets
• Managers' transactions: format and template for notification and disclosure
  • Means for transmission
  • Approach from notification to disclosure
  • Specified content
• Investment Recommendations
  • Date and Time of recommendations
  • Production of recommendations
  • Non-written recommendations
  • Dissemination of recommendations produced by third parties

The technical standards on co-operation and sanctions will form part of the final standards submitted to the Commission in 2015 and will not be consulted on.

Next steps

ESMA will consider the responses it receives to the consultation papers.  ESMA will hold an open hearing on the published CP in Paris on 8 of October 2014.

ESMA will finalise:

• the draft technical advice on delegated acts for submission to the European Commission no later than 8 months after the entry into force of MAR (so by 2 March 2015); and
• the draft technical standards for submission to the European Commission no later than 12 months after the entry into force of MAR (so by 2 July 2015).

ESMA will also consult on proposed Guidelines during 2015 in respect of:

• delayed disclosure (non-exhaustive list of legitimate interests and misleading the public)
• market soundings for the buy-side/recipients of inside information; and
• inside information for commodity derivatives.

The EU market abuse regime will apply from 3 July 2016.