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The Market Abuse Regulation: the First Five Years

27 July 2021

This month marks five years since the Market Abuse Regulation (596/2014/EU) (EU MAR), which has recently been retained into UK law following the expiry of the Brexit transition period (UK MAR), came into force.

The last five years have seen no shortage of challenges for financial services firms and listed issuers to grapple with in this area. For example, financial services firms have experienced difficulties in defining the universe of activities in scope of EU MAR (and now UK MAR) and in applying relevant regulatory requirements across different asset classes. For listed issuers, the FCA has been particularly focused on their ability to identify and disclose inside information, as well as their controls around share dealing by persons discharging managerial responsibilities and associated persons.

Throughout the last five years, the FCA’s market monitoring capabilities have also evolved considerably, as has their focus on financial services firms' systems and controls to detect and, if appropriate, discharge their obligations to report suspicious transactions and orders to the FCA.

Although there has been a significant increase in the number of open market abuse investigations in the last five years into financial services firms and listed issuers, as well as those who work for them, only a very small proportion of these investigations has resulted in enforcement action actually being taken by the FCA. However, as the FCA made clear in its recent Business Plan for 2021/22, the FCA's appetite to identify and take action where it suspects market abuse may have been committed shows no sign of waning.

This publication looks back at some of the key issues and areas of regulatory scrutiny that have emerged since the introduction of EU MAR from the perspectives of both financial services firms and listed issuers from all sectors. It also looks forward to the implications of the areas of divergence between EU MAR and the UK’s retained version of it, as well as potential market abuse issues and themes that may arise in the future.

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The full article first appeared in the July 2021 issue of PLC Magazine.