CySec introduces full policy to combat market abuse

The Cyprus Securities and Exchange Commission (CySEC) has today issued a notice in order to inform all market participants of the publication of Regulation (EU) No 596/2014 on market abuse, which the regulator is referring to as Market Abuse Regulation (MAR).

This new ruling is related to Directive 2014/57/EU on criminal sanctions for market abuse under the Market Abuse Directive (MAD). It complements MAR by requiring all EU Member States to provide for harmonized criminal offences of insider dealing and market manipulation, punishable with effective sanctions everywhere in Europe.

The legislative package MAR/MAD will enter into force on July 3rd 2016. Cyprus needs to amend/repeal its national laws, regulations and statutory provisions to make sure the MAR is ready to enter into force and amend/enhance its national criminal law regime for the transposition of MAD.

CySEC will undertake all necessary work and drafting for the transposition of MAR, and is preparing to take several actions including the implementation of maximum harmonization provisions set out in the MAR, as well as setting forth the upcoming binding technical standards and implementing acts of the European Commission. The regulator will also amend or repeal all national laws that cover matters now falling under MAR/MAD.

With regard to the changes which will occur as a result of MAR, the scope is to be expanded to financial instruments admitted to trading or traded in Multilateral Trading Facilities (MTF), or for which a request for admission to trading has been made, financial instruments traded on Organised Trading Facilities (OTF), emission allowances and auction products that are not financial instruments, spot commodity contracts, under conditions, and behaviors in relation to benchmarks.

Additional financial instruments will also be brought into the scope following MiFID II. Inside information, insider dealing, Unlawful Disclosure, Market Soundings and Market Manipulation will be considered as matters which will be covered under this directive.

Inside information, insider dealing and market manipulation, matters which many jurisdictions consider to be criminal matters rather than regulatory issues, have been redefined and unlawful disclosure is now codified.

Market soundings, legitimate behaviors and accepted market practices are now codified to draw the lines of where certain acts do not constitute violations. Legitimate behavior is codified for instances of insider dealing and unlawful disclosure.

Disclosure requirements under CySec’s jurisdiction are being expanded, with the insiders list being redefined with exceptions being granted to small to medium sized enterprises.

CySEC advises all parties involved to consult carefully with regard to this new regulation in order to be aware of the upcoming changes and to plan ahead.

To read the full announcement from CySec, click here.

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