The European Securities and Markets Authority (ESMA) has published its first in-depth review of the Market Abuse Regulation (MAR) since its implementation in 2016. It is expected that the report will feed into the European Commission’s own review of MAR.
The report follows a 2019 consultation on MAR which concluded that overall MAR is fit for purpose and has worked well in practice. Despite these findings, the report recommends various amendments to MAR including in relation to:
- Market soundings – ESMA suggests clarifying that the MAR requirements represent an obligation for disclosing market participants that, if complied with, will protect them from the allegation of having unlawfully disclosed inside information;
- Benchmark provisions and the interplay between MAR and collective investment undertakings – the responsibility of management companies in relation to the disclosure of inside information should be clarified; and
- Withholding tax reclaim schemes – ESMA suggests removing the legal limitations for National Competent Authorities to exchange information with tax authorities.
In the report, ESMA also suggests providing additional guidance on:
- Inside information and disclosure – ESMA intends to issue further guidance in relation to the application of the definition of inside information and for specific scenarios concerning delayed disclosure; and
- Pre-hedging – ESMA intends to issue further guidance on pre-hedging conducts, which would consider the factors to take into account when assessing market abuse and conduct violation risks. ESMA says it may assess pre-hedging in the future and will consider specific circumstances such as its importance for illiquid instruments or the consequences of pre-hedging activities on the markets.