The Market Abuse Regulation (MAR) will be in effect from  July 3rd 2016, less than a week from today. From that date, the use of inside information, and actual and attempted market manipulation will breach these rules. The scope includes a great deal of activity in the commodities markets, including spot commodities trades in many cases.( See here for the MAR level 1 text and here for the Market Abuse Directive II.)

One of the key aspects of MAR is the requirement for “PPAETS” (Professional Persons Arranging and Executing Transactions) to implement “effective monitoring”, spanning technology process, organisation and training, as well as effective Suspicious Transaction and Order Reporting procedures. The PPAET is widely defined under MAR, more so than the “PPAT” under REMIT.

A few weeks ago ESMA issued a one entry Questions and Answers document on MAR, which reiterated the definition of the PPAET (including all who trade on own account). It also reminded non financial counterparties that as PPAETs they would be fully subject to MAR. The requirements for effective monitoring can be found here in the corresponding Delegated Regulation which has now been published in the Official Journal. (See here for a table of all MAR technical standards).

Given the scrutiny of the commodities sector by the FCA, we can expect a continuing focus on the area of monitoring and surveillance. On top of this, scrutiny of monitoring from energy regulators, given the start of REMIT reporting, is likely to continue, especially after the addition of several sections on monitoring to the REMIT guidance a few days ago.

This dual spotlight on the sector means that market participants are advised not only to be ready with appropriate policies, procedures and technology from next week, but also to plan for any necessary improvements to their capabilities over the coming months.