November 15, 2013 - The European Securities and Markets Authority (ESMA) has published a Discussion Paper (DP) setting out its initial views on the implementation measures it will develop for the new Market Abuse Regulation (MAR), covering the surveillance of European financial markets. It has invited capital market participants to respond by 27 January 2014.

The aim of the discussion paper is to build upon the MAR Level 1 text agreed by the European Parliament, the Council and the European Commission (EC) on 25 June 2013 this summer, and start to outline how the industry must implement the coming new European market abuse regulation.

MAR builds upon the existing amusingly-named European Market Abuse Directive (MAD) and the latest DP from ESMA takes the most recent MAD Level 2 texts and the Committee of European Securities Regulators (CESR) guidelines into account during this latest update exploring implementation options. MAR is supposed to improve the existing MAD market integrity and investor protection rules on European markets, introducing new stipulations to cover new markets, trading strategies and abuse vectors. The idea is to enhance existing surveillance systems, technology and reporting mechanisms.

The ESMA paper presents the European regulator's positions and options in regard to implementation measures, covering the likely regulatory technical standards, delegated acts, standardised messaging/reporting rules and so forth. These implementation measures are of fundamental importance to the new MAR regime, as they set out how its enlarged scope is to be implemented in practice by capital market participants, trading platforms, investors, issuers and all persons related to financial markets.

Industry feedback to the DP will be collated and incorporated into the draft Technical Standards and Technical Advice to the EC that ESMA is due to submit next year, dependent upon when the final version of MAR is published.

The DP covers ten sections of MAR where ESMA’s input will be crucial, including:

• Conditions to be met by buyback programmes and stabilization measures to benefit from the exemption from market abuse prohibitions.
• Arrangement and procedures required for market soundings, from the perspective of both the sounding and the sounded market participants.
• Indicators and signals of market manipulation.
• The criteria to establish accepted market practices.
• Arrangement, systems and procedures to put in place for the purpose of suspicious transactions (tracking) and order reporting, as well as the content and format mechanisms.
• Issues relating to public disclosure of inside information and the conditions for delay are also in the MAR DP.
• The format for insider lists.
• Issues concerning the reporting and public disclosure of managers’ transactions.
• Arrangements for fair presentation and disclosure of conflicts of interests by producers and disseminators of investment recommendations.
• Reporting of violations and related procedures.