The new Market Abuse Regulation (MAR)
represents a huge operational challenge for voice traders and
the buy-side, according to Bloomberg’s head of
"In the voice trading and broking world,
we are seeing a huge number of challenges due to MAR; with the
detection of manipulative behaviour an integral part to the
rules, firms are contending with new requirements that have not
historically covered the voice world," Harald Collet, global
business manager for compliance products at Bloomberg, told
Collet said regulators had traditionally
focused on the sell-side to guard against market abuse but this
has changed also, bringing with it new challenges.
He said: "In the lead-up to the
implementation of MAR the scope widened, bringing in
broker-dealers, hedge fund advisors and investment banks. The
market has seen a big change as the buy-side is no longer at a
less-regulated level. The buy-side has had to contend with a
lot, it has been heavily impacted by the new rules.
"Pairing calls with executed trades
– from initiation through to post-trade – is
now required, so this increases regulatory pressure, as are the
rules governing record-keeping which now state that files must
be kept for five years. The latter alone creates a data storage
challenge, but firms must also have appropriate content
searching and reconstruction capabilities in place," he
The market abuse regulation came into
force on July 3 2016 but was overshadowed by the aftermath of
the UK’s shock decision to leave the European
Union on June 23 and preparation for the sweeping European
directive Mifid II.
"The market was taken by surprise by MAR;
Mifid II was the main focus for a lot of firms so it was only
when the delay was confirmed that attention really started to
ramp up on MAR prep. We saw a rush of clients in the month
leading up to implementation," said Collet.
The European Commission in February delayed
the deadline for the introduction of Mifid II by one year to
January 3, 2018 due to the technical build out
required by the regulator and firms to meet the directive.
"The work undertaken to meet MAR rules
will go a long [way] toward Mifid II rules over surveillance,
trade reconciliation and record-keeping well…" said
London Metal Exchange's head of regulation,
Kirstina Combe believes the UK’s
tough stance on regulation – including MAR and Mifid
II - will be an important pawn in the country’s
negotiations over its exit from the EU.
Lawyers said after the market abuse rules
were introduced that they could become a potential global standard for tackling
illicit trading activity.
In the months leading up to introduction
of the rules, market experts raised concerns over the lack
of practical guidance.