Market Abuse Regulation has been effective since 3rd of July 2016. It will not only affect banks, funds, and investment firms but also most EU issuers.

1. Hao(Jason) Tian
27/02/2017

2. ROADMAP
Purpose of MAR
Three Types of Market Abuse
Administrative Sanctions
Beneficial Party
Samples
References

3. Purpose of MAR
Ensure that regulation keeps pace
with market development
Strengthening the fight against
market abuse across commodity
markets, benchmark, emission
allowances.
Reinforcing the investigative and
administrative sanctioning powers of
regulators
Harmonizing certain key elements e.g.
reporting and notification requirements

4. Market Manipulation
Insider Dealing
Unlawful disclosure of
non-public information
Three Types of Market Abuse

5. Market Manipulation
Giving or to give false or misleading signals
as to the supply/demand of a financial
instrument
Securing or to secure the price of a
financial instrument at an abnormal level;

6. Inside Dealing
Precise ,
non-public
Relating to issuers or financial
instruments
Significant effect on
price

7. Unlawful Disclosure of
Non-Public Information
Possessing inside
information and
discloses it to another
person
Exception: if the
disclosure is made in
the normal exercise of
an employment, a
profession or duties

8. Administrative Sanctions
Requesting the freezing or
sequestration of assets
Carrying out on site
inspections and
investigation
Strengthening the
powers of the regulators
Administrative Pecuniary Sanctions: at least 15 million or
15% of total annual turnover for legal persons and of 5 million
for individuals

9. Beneficial Party
ETD/OTC
sell-side
trading
venues
technology
providers
buy-side

10. Example – Market Manipulation
A
Iron Ore
warrants
Buys and holds
Spot Month Iron Ore
contract
Buys
Exchange
1. Sell Warrants at high price in delivery;
2. Sell Iron Ore ETD/OTC contract at high price

11. Example – Inside Dealing
X Y
Info buys B stock
Director of
Company B
1.
2.
Company B has received a takeover offer.
T
Trader T learns LME aluminum is short in stock,
before the news is published.
Aluminum
contract
buys
X’s friend

12. Example – Unlawful Disclosure
X
Sells all B shares
Broker
C
Managing Director
Company B
D
Disclosure X’s identity

13. References
 [1] Preventing market abuse in financial markets
 [2] REGULATION (EU) No 596/2014 OF THE EUROPEAN
PARLIAMENT AND OF THE COUNCIL
 [3] FCA Handbook