AIMA

The Market Abuse Directive (MAD) was adopted by the European Parliament and Council of the European Union on 28 January 2003, with Members States required to implement its provisions into their national law by 12 October 2004.

The aim of MAD was to bring convergence among the different existing national regimes, by establishing a basic framework for the prevention of market abuse. MAD, therefore, introduced a common EU legal framework to seek to prevent both insider dealing and market manipulation and to provide sanctions where the rules were breached. It also established a common framework for the disclosure of information to the market.

On 20 October 2010, the European Commission adopted proposals for (i) a revised Directive and (ii) a new Regulation (MAR). Between them, these proposals, among other things:

• significantly extend the scope of the current market abuse regime by bringing within it financial instruments traded OTC which might have an effect on the covered underlying market;
• more closely align the way in which the market abuse regime applies to commodities and commodity derivatives trading (including the definition of ‘insider dealing’) with its application to securities markets;
• introduce a new offence of attempted market manipulation, where a person intends to manipulate the market but does not place an order or execute a transaction;
• provide competent authorities with specified powers to enhance their ability to tackle and investigate market abuse, including the power to enter private premises, to seize documents and to access telephone records; and
• establish a more harmonised regime in respect of criminal and administrative sanctions across the EU Member States, in order to reduce the possibility of regulatory arbitrage

The European Parliament voted through its plenary reports on the Commission's MADII and MAR proposals on 8 October 2012 while the Council of the European Union agreed its general approach on the proposals on 5 December 2012. Trialogues commenced on 24 January 2013 and are currently underway between all three European Institutions.

Although it was originally intended the MAD review would largely be run in parallel with that of MiFIDII/R, the delays on the latter have meant that MADII/MAR is likely to be largely agreed first. However, since a number of issues in MADII/MAR are dependent on, for example, defined terms determined under MiFIDII/MiFIR, a final text of MADII/MAR is still some way off. Application of the new rules was expected to take effect from 2015, though this timetable is now no more than provisional.

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Key legislative documents

MAD

LEVEL I

Directive 2003/6/EC

LEVEL II

Directive 2004/72/EC

Regulation No. 2273/2003

Directive 2003/124/EC

Directive 2003/125/EC

MAD II / MAR

European Commission Proposal MAD II - LIBOR amended (July 2012)

European Commission Proposal MAR - LIBOR amended (July 2012) 

European Commission Proposal MAD II (October 2011)

European Commission Proposal MAR (October 2011)

European Parliament Plenary Text MAD II (October 2012)

European Parliament Plenary Text MAR (October 2012)

Council of the European Union General Approach MAD II (December 2012)

Council of the European Union General Approach MAR (December 2012)

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Relevant consultations

European Commission Impact Assessment MAD II (October 2011)

European Commission Public Consultation: A Revision of the Market Abuse Directive (June 2010)

Call for Evidence – Review of Directive 2003/6/EC on insider dealing and market manipulation (Market Abuse Directive) (2009)

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AIMA documents

AIMA Note on the progress of the European Commission's draft proposal for a regulation on insider dealing and market manipulation - MAR (March 2013)

AIMA Comparison of the European Commission's proposal for a Market Abuse Regulation (January 2013)

AIMA Position Paper (February 2012)

AIMA Response to the European Commission’s Public Consultation on a Revision of the Market Abuse Directive (July 2010)

AIMA Response to the Call For Evidence Review of Directive 2003/6/EC on insider dealing and market manipulation (Market Abuse Directive) (June 2009)

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Other relevant documents

ECON Rapporteur's Draft Report on MAD (March 2012)

ECON Rapporteur's Draft Report on MAR (March 2012)

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Other resources

AIMA Noticeboard