The Market Abuse Regulation (MAR) and MAD II come into effect on the 3rd July, which is 6 weeks away. From that date, the provisions of the original Market Abuse Directive(MAD) are extended in several respects. The commodities and energy sector are impacted by the extension as well, especially since the legislation makes explicit reference to physical spot commodity trades. It also includes a requirement for “effective monitoring” that is more widely defined than under REMIT. MAR generally covers:
- Contracts on Regulated Markets and Multilateral Trading Facilities (MTF)
- OTC derivatives which may influence the prices of 1.
- Spot commodity trading that could influence the prices of 1.
This post on the ICIS Regulation Portal gives a high level overview of the requirements, looking at various aspects of the rules.
This post by PWC looks at a few of the implications of the regulations.
In general, the commodities and energy sector is seeing an increased need to improve monitoring processes and technology. This stems not only from the MAR rules, but also because of REMIT, which outlaws market manipulation. The start of data collection several weeks ago means that National Regulatory Authorities together with ACER now have data about participants’ activities. This, a recent large fine to Iberdrola, a thematic review from the FCA and a letter from Ofgem, is focussing the efforts of many market participants.