Most of the EU Market Abuse Regulation (Reg 596/2014) (MAR) took direct effect in EU/EEA member states, including the UK, on 3 July 2016. MAR makes significant changes to the UK's civil market abuse regime.

MAR is supplemented by a number of delegated acts, technical standards and guidelines adopted by the European Commission and the European Securities and Markets Authority (ESMA).

In the UK, MAR has resulted in changes to the Financial Services and Markets Act 2000 and the Financial Conduct Authority (FCA) Handbook, including the Code of Market Conduct, the Model Code and the Disclosure and Transparency Rules, to ensure compatibility.

MAR applies directly to both listed issuers and AIM companies. There have therefore also been changes to the AIM Rules as a result of MAR. For more information on how MAR impacts on AIM companies, see The Market Abuse Regulation – Impact on AIM companies.

The new offence of market abuse

MAR provides that it is an offence to:

  • engage or attempt to engage in insider dealing;
  • recommend that another person engage in insider dealing or induce another person to engage in insider dealing;
  • unlawfully disclose inside information; or
  • engage in or attempt to engage in market manipulation.

Although these offences are very similar to the previous regime in the UK there are some significant differences:

  • MAR extends the market abuse regime to cover behaviour both inside and outside the EU.
  • The offence of attempting to engage in market manipulation is new.
  • There is a new market soundings safe harbour to the offence of unlawfully disclosing inside information.

Disclosure and control of inside information

As before, an issuer has an obligation to disclose to the public all inside information relating to it as soon as possible, but can delay disclosure if certain conditions are satisfied. There is, however, a new requirement for an issuer to notify the FCA if the issuer delays disclosure and to provide a written explanation of why the issuer believes that the delay was permissible if the FCA requests it. Where an issuer delays disclosure, it must keep a record of the circumstances.

The rules regarding insider lists which issuers (and their advisers) must keep are more detailed and prescriptive.

Dealings by persons discharging managerial responsibilities

There is a new regime for dealings by persons discharging managerial responsibilities (PDMRs) and persons closely associated with them. This catches a wider range of transactions including gifts and donations.

PDMRs and their closely associated persons must notify both the issuer and the FCA of every own account transaction within three business days. This obligation only applies once a threshold of €5,000 is reached, though voluntary notification below this level is also possible (and likely to be required by many issuers under their internal policies).

MAR provides that a PDMR must not, subject to certain limited exemptions, conduct any transaction relating to financial instruments of the relevant issuer during a "closed period" of 30 calendar days before the announcement of an interim financial report or year-end report. Pending clarification from the European Commission and ESMA, the FCA has stated that, where an issuer announces preliminary results, the closed period, where dealing is prohibited, is immediately before the preliminary results are announced. This is provided the preliminary announcement contains all inside information expected to be included in the year-end report.

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