In the event of a no-deal Brexit, changes will be made to UK law on the market abuse regulatory regime.
These changes are to be implemented by the Market Abuse (Amendment) (EU Exit) Regulations 2019 (UK MAR), which will become fully effective on the date of exit from the European Union (although certain elements came into force on 19 February 2019).
UK MAR is designed to ensure that UK markets and financial instruments continue to be subject to the same requirements and protections as under the Market Abuse Regulation (EU MAR), which was implemented in the UK through the Financial Services and Markets Act 2000 (Market Abuse) Regulations 2016.
The new legislation will continue to enforce the main aspects of the old legislation, as well as making several changes. The territorial reach of UK MAR will be England, Wales, Scotland and Northern Ireland.
Despite the short period of time between now and 29 March 2019, companies are obliged to put reasonable measures in place to ensure they are compliant by exit day.
The dual purpose of UK MAR is to enable the UK to legislate on, and supervise, legislation in this area. With this in mind, some of the key amendments resulting are:
UK MAR will still cover the same scope of financial instruments trading, or admitted to trade, on UK and EU trading platforms. This is because, even in the event of a no-deal Brexit, a close cooperation on financial services offerings between the UK and the EU is envisaged. The following areas of EU MAR will therefore be incorporated into UK MAR with little substantive change:
Issuers with financial instruments admitted to trading or traded on a UK trading venue which are based in an EU member state will be required to do the following:
Although UK MAR retains broadly the same disclosure and notification requirements for inside information and delaying disclosure, it sets out slightly different reporting requirements. Issuers with financial instruments on UK trading platforms will need to:
PDMRs of issuers with financial instruments on a UK trading platform will need to send PDMR transaction reports to the FCA, as well as to any EU competent authority under EU MAR. The content and format of these transaction reports will remain the same.
For reporting to benefit from the exemption for buy-backs and stabilisations under UK MAR for EU traded shares and securities, issuers must continue to report to the relevant EU competent authority. Note that this differs to the reporting changes for Articles 17 and 19 above.
To benefit from the same under UK MAR for shares and securities traded on UK trading venues, issuers must continue to report to the FCA.
If Britain succeeds in reaching a deal with the EU, there will be an implementation period until 31 December 2020 during which the UK will continue to adhere to EU legislation (including EU MAR). In such a situation, this note should be disregarded.
As it is not clear whether a no-deal scenario will arise, we recommend that you look out for further communications from the FCA, particularly any publications relating to changes they are making to their Handbook, the Binding Technical Statements relating to MAR and other related statutory provisions. We recommend that you regularly check the Treasury and FCA websites for updates as we draw closer to 29 March 2019.
If you would like detailed advice on UK MAR, please do get in touch with Alice Gardner on +44 (0)333 006 0341.
This publication is intended for general guidance and represents our understanding of the relevant law and practice as at March 2019. Specific advice should be sought for specific cases. For more information see our terms & conditions.