The European Market Abuse Regulations (MAR) have been at the forefront of the financial regulatory landscape since July 2016. Despite its six-year presence, compliance with MAR regulations remains a consistent priority for regulators across Europe, including the UK. Regulatory enforcement continues to unveil that firms still grapple with adherence to rules governing the management of material nonpublic information (MNPI).
RegTech company My Compliance Office (MCO) recently delved into what firms need to know about
According to Article 18 of the Market Abuse Regulation, issuers, or any person acting on their behalf, are mandated to ensure acknowledgment in writing of the legal obligations surrounding insider information and associated sanctions.
MNPI consists of significant information such as company intentions for take-overs, executive resignations, asset sales, unexpected earnings releases, and significant legal proceedings. The mishandling of MNPI can lead to unfair advantages in the market and is considered critical from a regulatory standpoint to mitigate the risks of market abuse and manipulation.
To address these stringent market abuse requirements, firms must deploy clear processes and utilise technology to track and manage individuals with access to insider information. This technological framework should support policies and procedures, facilitate necessary activities and disclosures, and identify potential gaps and suspicious activity.
In January 2023, the French Autorité des Marchés Financiers imposed fines ranging between €5,000 and €1,000,000 on ten individuals for insider dealing and €350,000 on the firm for failure to maintain the insider list.
Furthermore, ESMA’s Strategic Priorities for 2023-2028 highlights the importance of market integrity and investor protection, focusing on supervisory convergence, market surveillance, and unified MAR enforcement.
In the UK, the Financial Conduct Authority’s Business Plan for 2023/24 emphasises assertive action against market abuse, requiring robust systems, accurate disclosures, and high-quality reporting from firms and issuers. Non-compliance could lead to criminal, civil, and supervisory sanctions.
The Netherlands Authority for the Financial Markets Annual Report in 2022 accentuates increased supervision and enforcement regarding market abuse and timely insider information announcement.
MCO’s insider list and MNPI management compliance solution aids firms in tracking access to insider information and control of roles and rights assignments. This functionality enables compliance teams to swiftly respond to regulators with a robust audit trail of who accessed specific information.
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