25 July 2018
On the two-year anniversary or MAR's introduction, our community looks at its influence
With July marking the two-year anniversary of the implementation of the Market Abuse Regulation (MAR), we asked the Governance and Compliance and Core community to look at MAR’s impact on the market and the bearing it places upon resources.
The headline figure shows that nearly half of respondents (48%) feel there has been no positive impact from MAR on the market, with only a fifth (22%) seeing a positive effect and nearly
a third unsure (30%).
The strength of the previous system appears to be a factor behind this viewpoint, with one respondent stating: ‘The previous rules were fairly strong, so it is unclear what the impact has been … Perhaps there is more scrutiny in certain areas … but the overall market impact is not clear.’
This is echoed by another, who comments: ‘I do not think it has had any positive impact at all. Our market abuse regime before was perfectly adequate.’ Another concurs: ‘There was nothing wrong with the previous regime given how it had been implemented in the UK.’
Some respondents went a step further and claim that MAR has in fact had a negative impact, with one respondent saying: ‘there were elements … which were better under the previous regime.’
Respondents were more split over the issue of whether MAR’s introduction had placed an excessive burden upon resources, with exactly half of respondents agreeing that it had, while 33% believe it had not and 17% are unsure.
While one respondent commented ‘The most difficult aspect [of MAR] has been on resource,’ a number of responses focused on whether or MAR was a good use of resources, excessive or not. One stated that ‘it has added a lot of unnecessary work which brings no value,’ while another saw it as an ‘additional administrative burden that does not add any value or enhance market confidence.’
However, for the most-part respondents saw the burden as being short-term, with one person commenting that ‘initial preparations required a significant amount of resource but running thereafter is relatively straight forward’. Another agreed stating: ‘It took some effort to set up but has a low maintenance cost.’
The identification of what requires disclosure has proven challenging. The most difficult aspects of disclosure for our respondents are: ‘ensuring you are disclosing the correct things’, ‘deciding whether an activity falls under the disclosure requirements’ and ‘determining in advance what constitutes inside information.’
On the subject of inside information, one respondent also remarked that ‘keeping insider lists up to date’ was a challenge, and another commented that ‘trying to determine the exact time when inside information existed [is difficult]. It is often not that black and white.’
Beyond many responses calling for a repeal of MAR as the only way of offering improvement, respondents urged less of a universalist view, instead seeking: ‘More flexibility, particularly for SMEs for whom the rules are too restrictive,’ and ‘tailoring requirements for various types of businesses: asset managers differ from the investment banks and other institutions.’
Simplification of the system was a common theme with calls for ‘a less burdensome system of record keeping’, ’simplification of the documentation and recording requirements’ and ‘[to] provide more guidance and clarity.’
Others were in favour of minimal interference with one respondent stating: ‘None. It is not perfect but companies have development structures to implement the regulations in ways which are suitable to their circumstances,’ and another saying that ‘at this point I wouldn’t change it but some additional guidance from the FCA on some areas might be helpful.’
This was echoed by another respondent who stated; ‘On balance, the regulations are fairly clear. A universal taxonomy on market abuse would be helpful but reaching agreement across geographical boundaries brings its own set of challenges.’
If you are a company secretary or governance professional at a leading UK business, and you would like to take part in or comment on future surveys, email firstname.lastname@example.org