MAR (Market Abuse Regulation)

What it is

The Market Abuse Regulation (MAR) has applied across the EU since 3 July 2016. It covers financial instruments traded on regulated markets, multilateral and organised trading facilities, related derivatives and emission allowances. A separate directive (CSMAD) sets criminal sanctions.

MAR has three prohibitions:

1. Insider dealing: using inside information to trade, or to cancel or amend an order.
2. Unlawful disclosure of inside information outside the normal exercise of a job.
3. Market manipulation: transactions, orders or statements that give false signals about supply, demand or price, or that secure an abnormal price. Examples are spoofing, layering, wash trades and spreading false rumours.

Inside information is precise, not public, relates to an issuer or instrument, and would likely have a significant effect on the price if made public.

MAR also imposes preventive duties. Issuers must disclose inside information as soon as possible or document a delay. Issuers and advisers keep insider lists. Persons discharging managerial responsibilities (PDMRs) report their own deals. Firms that arrange or execute transactions must detect and report suspicious orders and transactions (STORs). Market soundings and investment recommendations follow specific procedures.

Why it matters

MAR protects market integrity and investor confidence. Breaches can lead to large administrative fines, bans and criminal prosecution. For firms, MAR drives surveillance systems, information barriers, watch and restricted lists, and staff training. For listed companies, it drives the timing of every price-sensitive announcement.

Worked example

Illustrative numbers.

A listed company learns at 10:00 that a large contract worth 15% of annual revenue is agreed. The board decides this is inside information. It can either publish at once or delay if disclosure would harm legitimate interests, the delay does not mislead and confidentiality is kept.

It delays for two days. During that time 12 people are added to the insider list with the time they gained access. On day two the share price rises 4% on rumours, so confidentiality is lost and the company must publish immediately and later notify the regulator of the delay.

Who uses it

• Compliance officers run watch lists, surveillance and the STOR process.
• Conduct risk analysts review alerts on trading and communications.
• Trading analysts and markets sales staff apply MAR in daily order handling and client calls.
• Company secretaries of listed companies keep insider lists and manage PDMR notifications.
• Investor relations analysts manage disclosure timing and market soundings.

Common confusions

• MAR applies to people and firms of every type, including non-financial firms and individuals.
• Inside information can exist before a deal is final. Intermediate steps in a process can qualify.
• A STOR is about market abuse and goes to the market regulator. A suspicious activity report is about money laundering and goes to the FIU.
• The EU Listing Act amended MAR in 2024. One change is that intermediate steps in a protracted process no longer need immediate public disclosure, although they can still be inside information. Firms should check the consolidated text.