The Market Abuse Regulation (MAR) comes into effect on 3rd July 2016. It widens the scope of the original Market Abuse Directive (MAD) to include many instruments. This includes all derivatives traded on venues, and well as those instruments that may influence their prices, including spot commodity trades. The requirements span the specific outlawing of manipulation, handling of inside information and a monitoring provision that is wider than REMIT. The monitoring provision is likely to require many commodity and energy market participants to step up their capabilities, in organisational, procedural and technology terms.
Some of MAR relies on MiFID II being in place. Amongst others, there are two areas to consider:
- Venues – MAR includes instruments traded on Regulated Markets, MTFs and OTFs. However the OTF does not actually come into existence until MiFID II is implemented.
- Scope – MiFID II makes adjust to Annex I Section C, which defines a “derivative”. The changes include Emission Allowances (rather than derivatives of them) as well as changes to how physical forwards may be included.
The “underlap” in the rules, which was to have been six months, means that in effect MAR is being introduced in phases. And the legislation makes explicit reference to concepts not yet in place. The year long MiFID II delay prolongs this period. This article on the International Financial Law Review site (free registration required) examines this issue in some more detail.
Despite the phasing, market participants in energy and commodities will need to consider how best to comply , and possibly step up monitoring, not only because of MAR, but also because National Regulatory Authorities (NRAs) will begin to examine the complete data set submitted under REMIT, at least in part, after April 7th.