The Market Abuse Regulation (MAR), introduced in 2014 with the precise intention of setting forth uniform rules in the Union on market abuse, is now at the centre of profound reflections in view of its possible revision.
In a relatively short period of time, both the High Level Forum - an expert group established by the European Commission to feed into the work of the future Capital Markets Union policies - and the European Securities and Markets Authority (ESMA) have given their advice on the topic. The subject matter was also discussed extensively during a webinar organised by the Malta Financial Services Authority’s Financial Supervisors Academy last February.
ESMA’s assessment of the state of the Regulation, which was provided in response to the Commission’s request, is overall positive. The cornerstone of the Regulation is clearly identified in the notion of “inside information”. Whereby ESMA considers that this definition has functioned well, and does not require any major amendments, on different grounds the High Level Forum proposes to: (i) clarify that price sensitive information is information that a rational investor would be likely to consider relevant for the long-term fundamental value of the issuer, and to (ii) provide for a safe harbour in relation to the obligation to disseminate the so-called “preliminary information”, leaving ESMA with the task of defining the content of this notion.
The ESMA Report also contains interesting data in relation to the notifications of delayed disclosure received from 2016 by the National Authorities according to art. 17(4) MAR. The Report highlights the existence of discrepancies in the practice of the Member States, and anticipates the issue of guidelines on several, relevant profiles connected with the delay (time frame; notion of legitimate interest; evaluation of the need not to mislead the public; the treatment of rumours). The role of soft law seems bound to increase in the context of the MAR regime.
The ESMA Report highlights the centrality of the issuer’s internal organisational structures for the fulfillment of the obligations deriving from the MAR: a profile, in our opinion, essential. The Report also raises the issue as to whether MAR should formulate an explicit duty upon issuers to set up adequate internal safeguards and procedures. The answer to the question is negative: however, we believe that such a duty, if clearly integrated in MAR, would strengthen the effectiveness of the Regulation and foster its uniform application in the Union. It could also help to clarify several profiles linked to the private enforcement of MAR: an essential profile, for the moment entirely left to national law. The fact that the Report brings this issue to light is, in any case, per se significant, and needs to be singled out.
Ultimately, the launch of such extensive reflections on possible revisions of the MAR shows that the subject of market abuse is still fluid, and that the Regulation is destined to keep on evolving in terms of its interpretation and application. For the moment, scholars and operators can be sure that, in the near future, they will not fall short of significant food for thought on these topics.
Prof. Filippo Annunziata is Associate Professor of Financial Markets and Banking Legislation at Bocconi University, Milan. His main interests revolve around most areas of financial markets and banking regulation, with a particular focus on capital markets legislations (investment funds, investment services, public offerings, trading venues). He has also been extensively engaged with market abuse regulation, corporate governance, and EU Banking Supervision. Prof. Annunziata recently participated in the webinar “Market Abuse Regulation (MAR) Review” organised by the MFSA’s Financial Supervisors Academy.