NEW 8. REGS (FROM 10) Flashcards
EU MAR vs UK MAR
R = Regime
in 2016 pre Brexit - EU MAR came into force (replaced MAD- market abuse directive)
extended market manipulation to include attempted market manipulation and increased scope
Post brexit - there is EU MAR and UK MAR
EU MAR amendments arent automatically made to UK MAR
Sanctions imposed following finding of market abuse are severe
- unlimited financial penalties
-authorization/approval withdrawn if work in fin. services
Criminal aspects of UK MAR
may also be in breach of criminal law that runs in parallel to amended FSMA 2000 market abuse regime giving FCA power to prosecute
- breaches of FCA listing rules (including prospectus reqs_
- misleading statements and market manipulation
- misleading the FCA
- insider deading
- breaches of prescribed regulations related to money laundering
Markets subject to UK MAR
Wider range of trading venues than MAD and wider definition of qualifying instrument
all instruments that are
- admitted to trading on a regulated market (or for which request for admission has been made)
-traded on an MTF (or request for admission)
-traded on an OTF
- any instrument whose price or value depends on/affects the price or val of a QI above
Types of market abuse under UK/EU MAR
- engage or attempt to engage in insider dealing
-recommend/induce another person to engage in insider dealing
-unlawful disclosure of inside info
-attempting or engaging in market manipulation
Insider dealing
attempting or engaging in insider dealing =
using inside info in acquiring or disposing of financial instruments to which that info relates
using inside info to cancel/amend existing pre orders or bids
recommending or inducing also covers both of the above
Who is an insider
anyone who may have inside info as result of
membership of administrative/management or supervisory body of an issuer of QI
Holding in the capital of an issuer of QIs
Access to info through employment, profession or duties
criminal activity
other means by which they know or could reasonably be expected to know inside info
Unlawfully disclosing inside info
Offense to disclose inside info other than in normal exercise of employment/profession/duties
includes onward disclosure of recs/inducements where the speaker knew the rec/inducement was based on inside info
Engaging or attempting to engage in market manipulation
Includes
entering into a transaction/placing an order/any behaviour which
- gives false or misleading signals as to supply/demand/price of x
- secures price of financial x
- employs a fictitious device
disseminating info whcih gives false or misleading signals about supply/demand or secures price @ abnormal/artificial level (including rumours)
transmitting false/misleading info, false/misleading inputs in relation to a benchmark
x = financial instruments, related spot commodity contracts or auctioned product based on emission allowances
also captures attempted as well as actual market manipulation
Exemptions to UK and EU MAR
Price stabilization (prevents substantial fall in value of secs when a large number of new secs are issued)
Lead manager of issue can support price by buying back newly issued shares (<30 days, must disclose beforehand and detail all transactions at end of period)
Buybacks
Accepted market practise (must be agreed by FCA for UKMAR)
Penalties for market abuse
- unlimited civil fine
public statement that person has engaged in market abuse
apply to court for injunction to restrain threatened or continued market abuse
require person to disgorge profits made or losses avoided
require compensation to victims
FCA measures to detect and prevent market abuse
Insiders’ lists = issuers and advisors must keep lists of people with access to inside info
Disclosure of managers’ deals - issuers’ management must disclose all deals in the shares of the issuer and related derivs
STORs - suspicious transaction orders reports
FCA auth firms which arrange or execute transactions must report these immediately to FCA where there is suspicion on market abuse
Research disclosures - firms providing research must disclose info about sources, methods and conflicts of interest that might impact impartiality
Close periods
Under UKMAR, a PDMR (person discharging managerial responsibilities) cannot conduct any trades (in own acc or any third party) relating to shares or debt of issuers (or derivs) during close periods
close period = 30 days before announcement of interim or year end financial report
implementation of EU MAR
EUMAR - empowers ESMA (Euro secs and markets authority) to draft reg tech standards and implement technical standards
objective = enhance protection of investors and promote stable/orderly financial markets
to achieve
- assess risks to investors/markets and financial stability
- rulebook for EU finmar
-promotes supervisory convergence
-supervises credit rating agencies, trade repositories and securitization repositories
FCA code of corporate governance
Every listed comp should be headed by effective board - leads and controls comp
Board should meet regularly
Directors should bring independent judgement on strategy
No single indiv should have unfettered powers of decision
Combined chairman/CEO posts should be publicly explained
Should be strong independent non-exec component to board (balance of exec and non exec)
Formal and transparent procedure for appointing new directors
All directors should submit themselves for relection at least once every 3 yrs
Directors’ remuneration
Levels should be sufficient to attract and retain directors needed to run comp successfully
Should be linked to corp and indiv performance
`remuneration committees should be responsible for this and should only include non-exec directors
Notice periods should be max 1 yr
Annual report should contain remuneration policy and details of remuneration of each directior
