Compound Growth

© Compound Growth Limited 2012-2017

4th February 2016

AIM Firms - Are you ready for the New Market Abuse Regulation?

The New Market Abuse Regulation (MAR) becomes effective on 3rd July 2016, replacing the existing Market Abuse Directive (MAD) and bringing additional financial instruments from new trading venues within its scope.

Whilst MAD only applies to those financial instruments that are admitted to trading on ‘regulated markets’ the new Market Abuse Regulation (MAR) will include the alternative investment market (AIM) as the regulation will apply to those financial instruments admitted to all Multilateral Trading Facilities (MTFs) within the EEA.

MAR thus presents a significant expansion to the scope of the current market abuse regime, and as a law, will be directly applicable across the EU.

ACTION: With only a few months to go until MAR takes effect, AIM firms should now be updating their internal processes and procedures for the changes MAR will bring.

MAR focus points for AIM firms:

In particular AIM firms should ensure they understand:

• That the FCA will be the designated regulator under MAR for all UK based trading facilities and thus will be the prime regulator for AIM firms
• The regime and obligations relating to the disclosure of price sensitive information
• The requirement for them to keep and update 'insider lists' containing the detailed information on each individual (this may only be temporary)
• The requirement to disclose transactions by Persons Discharging Management Responsiblities (PDMRs). Whilst MAR sets a de minimis threshold of €5,000 within a calendar year (below this threshold transactions need not be notified) however, the FCA may increase this to €20,000.

The different close period that MAR introduces. (MAR imposes a mandatory 30 calendar day ‘close-period’  prior to the announcement of an interim financial or year-end report which the issuer is obliged to make public and during which PDMRs are not permitted to deal except in very limited situations.

Additional Trading Facilities Captured by MAR

As detailed, MAR goes beyond overseeing trading upon regulated markets and brings additional instruments within its scope. These include financial instruments:

• admitted to trading on the other trading platforms set out in MiFID II such as organised trading facilities (“OTFs”) and multilateral trading facilities (“MTFs”); and
• of which the price or value depends on or has an effect on the price or value of a financial instrument traded on a regulated market, OTF or MTF. This includes credit default swaps and Contracts for Differences (CFDs)

New Market Abuse Regulation to Apply to AIM Firms