Response to the ESMA Consultation on the Provisions of the Market Abuse Regulation (MAR)

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FESE members are committed to ensuring the highest possible level of investor confidence and market integrity. Exchanges have long assumed a central role in the oversight and supervision of markets, investing for decades in the systems, human resources and expertise required to detect and prevent market abuse of all kinds.

While we acknowledge the importance of MAR, we believe that some areas and issues should be reassessed and adjusted to ensure a proportionate and fair regime for all market participants. This could be done either via amendments to the Level 1 text or modifications at Level 2 and enhanced supervisory convergence.

Among the various topics raised in the Consultation Paper, we would like to highlight certain key areas that would require further work or guidance from ESMA:

  • Regarding the scope, even though there may be reasonable grounds for increased monitoring of possible market abuse and misconduct in the spot FX markets, the global nature and characteristics of those markets make it inappropriate to include them in the MAR regime as it currently is. There is an excessive need for structural changes in relation to infrastructure, transparency and supervision of the involved entities, in order for monitoring under the MAR regime to create value. The FX Global Code has developed as the appropriate industry standard for this market and this should be assessed further to determine if changes are required. Furthermore, we suggest removing benchmarks from the scope of MAR as have a separate manipulation regime in the EU Benchmarks Regulation. From an overall point of view, the benchmark concept and mechanisms are very different from the market mechanisms that MAR is built upon.
  • We believe that the definition of inside information is from an overall perspective adequate and sufficient for the purpose of preventing market abuse and should not be expanded. However, there are a number of aspects on which we would welcome clearer guidance as this would have the benefit of facilitating compliance for issuers, and also preventing fragmented interpretation both across Europe and within Member States.
  • We agree with ESMA’s view that insider lists are useful, not only to NCAs but also to issuers’ own compliance function. We do not believe that amendments are required to the Level 1 text in this area; however, further clarity would be helpful, e.g. to specify that only persons who have had actual access to inside information should be included in the corresponding insider list.
  • We believe that the proposal to establish a regular reporting mechanism of order book data needs to be considered very carefully, conducted in a harmonised fashion, and be accompanied by an impact assessment, as trading venues have already invested significant resources and costs into developing systems to comply with the current requirements. There is a risk that this proposal could result in increasing the burden on NCAs and venues, without achieving its objective on improving market surveillance. The underlying question is whether the potential advantages of cross-market order book surveillance justify the efforts and uncertainties (such as challenges related to the technical implementation or potential unintended consequences for trading venues and investment firms) that might result from requiring regular reporting of all this data.

The detailed FESE response also includes additional specific concerns relevant to FESE members.