As of 3 July 2016, the new Market Abuse Regulation (MAR) has entered into force in Belgium and across Europe. It repeals and replaces the existing regime of the Market Abuse Directive and its implementing legislation.
The Market Abuse Regulation
The new Regulation aims to update and strengthen the existing rules on market integrity and investor protection provided by the Market Abuse Directive. The new framework keeps pace with market developments, such as new trading platforms, as well as new technologies, such as high frequency trading. Furthermore, it strengthens the fight against market abuse across commodity and related derivative markets, reinforces the investigative and administrative sanctioning powers of regulators and harmonises certain key elements while reducing administrative burdens on SME issuers where possible. The MAR also introduces a new regime for market sounding (communication of information to one or more potential investors prior to the announcement of a transaction).
Besides the MAR, a new Directive on Criminal Sanctions for Market Abuse 2014/57/EU (referred to as CSMAD) introduces an updated and strengthened EU market abuse regime with a wider range of sanctions. Member States are e.g. required to introduce common definitions of criminal offences of insider dealing and market manipulation and to impose maximum criminal penalties of not less than 4 and 2 years of imprisonment for the most serious market abuse offences.
Developments at Belgian level
Since the MAR is a regulation, it is directly applicable in Belgium. As regards its main principles, the new regime is broadly comparable to the existing one in Belgium. However, the previously existing market abuse framework as set out in the Act of 2 August 2002 on the supervision of the financial sector and on financial services was amended by the Act of 27 June 2016 in order to prevent contradictions and to update some of the existing provisions. Additionally, the competences of the FSMA are further clarified and the maximum amounts of administrative sanctions that the FSMA can impose are increased.
In May, the FSMA has adopted guidelines to further comprehend the new market abuse regime and to make sure issuers comply with the MAR’s provisions. These include:
- obligations of the issuers listed on a regulated market, on Alternext or on the Free Market (with updated references to the MAR provisions); and
- practical instructions relating to the MAR.
Transaction notifications by persons discharging managerial responsibilities will have to be made through the FSMA’s online application.
The CSMAD has not yet been transposed into Belgian national law. At this moment, no draft implementing Act is publically available.
At European level, ESMA is continuously working on developing draft Implementing and Regulatory Technical Standards (ITS and RTS), which the European Commission then amends and adopts. Already 10 technical standards have been officially adopted, e.g. on the content and timing of notifications to competent authorities, systems and procedures for market soundings, public disclosure of insider trading, formats of insider lists, etc. Further technical standards are expected in the coming weeks.
At Belgian level, since the CSMAD has not yet been transposed, further amendments of the Act of 2 August 2002 can be expected. Furthermore, the FSMA announced it will update its Q&A on market abuse on its website.