On November 21, 2018, HM Treasury has published explanatory information on a draft statutory instrument, the Market Abuse (Amendment) (EU Exit) Regulations 2018. The statutory instrument is still under development and a draft will be published in due course. The draft Regulations will affect the FCA and all natural and legal persons which issue or trade in financial instruments admitted to trading or traded on an U.K. or an EU trading venue, including legal firms, professional service firms and any legal person that obtains access to the inside information of an issuer.
The forthcoming draft Regulations will amend deficiencies in the version of the EU Market Abuse Regulation that will be retained on Brexit (U.K. MAR). The changes in the draft Regulations will take effect on exit day in a no-deal scenario. The draft Regulations will:
- Transfer the powers of ESMA under EU MAR to the FCA to enable it to enforce U.K. MAR to the extent necessary for a functional U.K. regime.
- Maintain the existing scope of EU MAR in U.K. MAR. U.K. MAR will therefore continue to capture conduct involving instruments admitted to trading or traded on both U.K. and EU trading venues. The FCA will be able, as far as possible in the event of no deal, to take action in relation to conduct concerning financial instruments which affect U.K. markets and the U.K.'s reputation. This is quite a surprising and questionably justifiable extension of U.K. enforcement jurisdiction for post-Brexit arrangements, since MAR does not cover other major third-country markets that are traded by persons located in the UK.
- Preserve in U.K. MAR the requirements in EU MAR for certain notifications, disclosures and suspicious transaction reports.
- Enable investigation of possible market abuse and enforcement measures under U.K. MAR due to the preservation of the transaction reporting requirements of the onshored MiFID II package.
The explanatory information states that the U.K. MAR introduced by draft Regulations will not result in significant impacts for firms, as it is intended largely to continue the status quo. Issuers, firms and trading venues that currently report to the FCA under EU MAR will continue to report the same information to the FCA under U.K. MAR.
The explanatory information is available at: https://www.gov.uk/government/publications/draft-market-abuse-amendment-eu-exit-regulations-2018/market-abuse-amendment-eu-exit-regulations-2018-explanatory-information
Details of the proposals for onshoring the MiFID II package are available at: https://finreg.shearman.com/draft-uk-post-brexit-legislation-to-onshore-the-e
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