European Union: EU Market Abuse Regulation


With effect from 3 July 2016, the European Market Abuse Regulation (Regulation 596/2014) ("MAR") will replace the European Market Abuse Directive (2003/6/EC) ("MAD") that has been in place since 2003.  MAR introduces a harmonized EU market abuse framework aimed at enhancing market integrity and investor protection, and it will have direct effect in all EU member states. Along with MAR, the Directive on Criminal Sanctions for Market Abuse (2014/57/EU) ("CSMAD") will also come into effect across the EU, with the exception of the UK and Denmark, who have not opted into the directive. CSMAD complements MAR by introducing criminal sanctions for market abuse.

Unlike MAD, which covered activities on regulated markets only, MAR extends the scope of the market abuse framework to financial instruments traded on multilateral trading facilities ("MTFs"), including unregulated exchanges such as London's AIM, Luxembourg's Euro MTF and Ireland's GEM where many high-yield and investment grade bonds are listed, and organized trading facilities ("OTFs"), as well as to financial instruments whose value depends on or has an effect on the value of any such financial instruments traded on MTFs and OTFs, including derivatives such as credit default swaps.

Because MAR applies to financial instruments traded on a wide range of European trading venues, the regulation could have a broad, extra-territorial effect. For example, conduct by market participants outside the EU could be subject to sanction under MAR if it relates to financial instruments that are traded on a European trading venue. Additionally, non-EU issuers of debt or equity securities that are listed on such a European exchange will need to comply with MAR's requirements. Finally, MAR would apply to non-EU financial instruments whose price or value affects or depends upon a financial instrument listed in the EU.


MAR was developed as  a result of a scheduled review of the existing market abuse regime, which had become outdated in some respects due to increased globalization of financial markets and a number of new trading platforms. In the wake of LIBOR and manipulation investigations and an intensified focus on market abuse sanctions, EU regulators incorporated a number of important changes in the new regime. In particular, MAR will:

  • Extend the scope of the regime to cover MTFs, OTFs, and additional financial instruments;
  • Introduce an expanded definition of "inside information";
  • Extend the application of the market manipulation offence to capture attempted manipulation;
  • Impose restrictions on dealings by persons discharging managerial responsibilities and persons closely associated with them ("PDMRs");
  • Formalize the process that should be used for "market sounding" and the process that should be followed before disclosing inside information in the context of a market sounding;
  • Broaden the pre-existing regime on investment recommendations;
  • Extend the obligation to report suspicious transactions to include suspicious orders; and
  • Enhance supervisory, investigatory and civil enforcement powers of national regulators and place greater obligations on the European Securities and Markets Authority ("ESMA") to co-ordinate investigatory work and enforcement action conducted by national regulators.


Under MAD, companies were required to disclose price sensitive information unless a delay was jusitified. MAR broadens MAD's scope by requiring companies to have decision-making and record-keeping procedures to decide whether to delay such information and, upon announcing the information, to notify the regulator of any delay in announcement and explain how the delay complied with MAR. In addition, MAR requires companies to prepare and maintain lists of persons with access to such price sensitive information.

MAR and CSMAD also add new offences, including attempt to commit market abuse and canceling orders on the basis of information acquired after the order was placed.

To ensure compliance, companies should examine the policies they have in place to disclose price sensitive information. In the event of a delay in disclosure of such information, companies should record the rationale for the delay. Companies should also maintain detailed lists of persons with access to inside information and ask such per-sons to record in writing that they acknowledge the procedures and related sanctions.

Given the potential extra-territorial reach of MAR, as discussed above, it is important to note that what constitutes insider dealing in countries outside the European Union may differ from the scope of insider dealing under MAR. For example, under MAR, "inside information" is defined as "information of a precise nature, which has not been made public, relating, directly or indirectly, to one or more issuers or to one or more financial instruments, and which, if it were made public, would be likely to have a significant effect on the prices of those financial instruments or on the price of related derivative financial instruments."MAR also takes into account whether information is "information a reasonable investor would be likely to use as part of the basis of his or her investment decisions." In contrast to the United States, under MAR there is no requirement that there be a fiduciary or fiduciary-like relationship or a duty of trust or confidence between the source of inside information and the recipient of it. As such, it would be possible for activity that is permissible under U.S. laws related to insider trading to be subject to sanction under MAR.


MAR requires persons discharging managerial responsibilities and persons closely associated with them ("PDMRs") to disclose details of their dealings of shares and debt instruments, as well as related financial instruments.

Furthermore, MAR:

  • Reduces the time limit for notification of dealings by PDMRs to three days from the current four;
  • Introduces a minimum threshold for notification by PDMRs by providing that reporting requirement apply only if transactions carried out in a calendar year exceed the value of €5,000; and
  • Reduces the "close period" during which directors and senior management may not deal in securities from sixty days to thirty days prior to the publication of an interim or annual report.

Companies are required to draw up a list of all of their PDMRs and must notify all of them, in writing, of their obligations; PDMRs are then required to pass on such notification to all persons closely associated with them.

To ensure compliance, companies should review their policies and, in addition to get-ting written acknowledgement from current PDMRs, train any future PDMRs on these policies.


MAR introduces a set of new rules that apply to "market soundings," which are communications to gauge the interest of investors in a potential transaction. The rules generally formalise procedures that are already market practice.

Persons carrying out the market sounding ("DMPs") are required to:

  • Assess whether the market sounding will involve the disclosure of inside information;
  • Record in writing their conclusion as well as the information disclosed, indicating the criteria used; and
  • Make the records available to the competent authority upon request.

Furthermore, before disclosing any inside information, DMPs are required to obtain the consent of the investor, informing them to refrain from dealing on the relevant financial instrument and keep that inside information confidential. In addition, the DMPs must inform the investors when the  information is no longer considered to be confidential.

Finally, DMPs must maintain a record of all information given to the person receiving the market sounding, must use a script and must keep records and sounding lists, even when they consider that no inside information is being relayed during a market sounding. Companies and advisors could consider recording market sounding conversations as a means of complying with this requirement.

To ensure compliance, companies should review their policies and ensure that relevant employees receive adequate training. They should also obtain confirmation from any advisors that the advisors will follow these procedures.


MAR broadens the pre-existing regime on investment recommendations, requiring that persons who produce or disseminate investment recommendations or other in-formation recommending or suggesting an investment strategy must take reasonable care to ensure that such information is objectively presented, disclose their interests or indicate conflicts of interest concerning the financial instruments to which that information relates.

Furthermore, MAR lowers to 0.5% the threshold triggering the duty to disclose potential conflicts of interest arising from the holding of positions in the issued share capital of the issuer to which a recommendation relates.


Finally, MAR extends reporting duties to "suspicious orders" (MAD only required re-porting of suspicious transactions).

Reporting should follow the harmonized template for suspicious transactions and orders reports ("STORs") that ESMA proposes in its draft standards. The draft standards require that firms, as part of their market abuse detection systems, should keep records of the analysis carried out with regard to suspicious orders and transactions that have been examined and the reasons for submitting a STOR or not. This means that firms will also have to keep an audit trail of near-misses.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.