MAR could be global abuse template

The Financial Conduct Authority’s new European Market AbuseRegulation (MAR), which took effect earlier this month, could become the global standard for tackling illicit trading activity, lawyers have suggested.

James Wootton, corporate partner at law firm Linklaters,told FOW: “Global firms are increasingly facing the challenge of how to applydifferent standards across the different jurisdictions in which they operate -we will see the role of compliance teams, especially in the banking world,continue to grow as firms grapple with these issues and work out how to applyconsistent policies globally.

“It may be that the MAR framework becomes the benchmark forglobal regimes to follow over time,” he added.

Lisa Cawley, partner at law firm Kirkland & Ellis, toldFOW more regulatory harmonisation across jurisdictions would be a good thing. “I think we can expect to see some firms moving towardsMAR compliant policies across their offices… I have a lot of sympathy for firmstrying to deal with so many different rules and regulations in the markets inwhich they operate - as it can be so complicated to work out exactly what rulesare relevant in any particular scenario, particularly for global firms.”

Tony Sio, head of exchangeand regulator surveillance, market technology, at Nasdaq, said: “Market abuserules in other jurisdictions are not as explicit as MAR so the new regime ishelping to improve market practices… We are increasingly seeing firms alignglobally with the directive, even if they are technically operating out ofMAR’s scope. It is encouraging to see the European directive driving the globalapproach to market abuse rules.”

But Sam Tyfield, partner at law firm Vedder Price, warned there is more to this than creating a simple template: “A global ‘standard’for what amounts to abuse or manipulation would be beneficial, but no new abuseregime can be looked at in isolation; any regime needs to be looked at in thecontext of global ‘equivalence’ of regulations, different market structures andmarket practices globally and between asset classes, the new ‘senior managersregime’, the microstructural developments, the order and trade reportingregimes etc.”

The FCA’s market abuse regulation came into force at thebeginning of July.

As reported by FOW ahead of implementation, market experts have argued that firms are forced to adopt better practices and deliver benefitsbeyond basic compliance under the directive.

Nasdaq’s Sio said: “The new European rules are helping to improve detectionactivity. To help our clients comply we made enhancements to our detectionalgorithms as well as adding new ones. We’ve taken a lot of these improvementsand applied them to many non-European markets."

Before the new regime took effect, market participantsraised concerns over the surveillance requirements under the rules, as well ascalls for practical guidance on the new regulatory landscape.

Linklaters’ Wootton said: “The rules under MAR prescriberecord-keeping and monitoring of decision-making processes; this will make thelife of a regulator much easier when it comes to market surveillance andinvestigating perceived abuses. No doubt in practice this environment ofincreasingly formalised decision-making and record-keeping will focus the mindsof market participants at an earlier stage and to a greater degree than previously.“