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Market Abuse Regulation - Commentary and Annotated Guide edited by Ventoruzzo, Marco; Mock, Sebastian (30th November 2017)

Part B Commentary, 1 General Provisions, II Primary Scope of Application (Article 2(1))

Marco Ventoruzzo, Sebastian Mock

From: Market Abuse Regulation: Commentary and Annotated Guide

Edited By: Marco Ventoruzzo, Sebastian Mock

II.  Primary Scope of Application (Article 2(1))

B.2.03  For its primary scope of application, Article 2(1) distinguishes between financial instruments admitted to trading on a regulation market,5 on a MTF,6 on an OTF,7 and other financial instruments.8 Financial instruments are defined in Article 3(1)(1) by referring to the Markets in Financial Instruments Directive II (2014/65/EU).9

Financial instruments admitted to trading on a regulated market (Article 2(1)(a))

B.2.04  The Market Abuse Regulation applies to all financial instruments admitted to trading on a regulated market. The term regulated market is defined in Article 3(1)(6) and refers to the Markets in Financial Instruments Directive II (2014/65/EU).10 However, the Market Abuse Regulation also applies if the financial instruments are not admitted to trading on a regulated market but when a request for admission to trading has been made. This extension of the scope of application is necessary, because insider trading and market manipulation can occur when a request for admission has been made beforehand. In this context, it is required that all necessary steps for an application were made and that the application was successfully filed. Furthermore, the Market Abuse Regulation remains applicable even if the application is later withdrawn.

Financial instruments traded on a multilateral trading facility (MTF) (Article 2(1)(b)

B.2.05  Furthermore, the Market Abuse Regulation applies to financial instruments traded on a MTF (Article 3(1)(7)11). As in Article 2(1)(a), the request for admission is also already sufficient.12

(p. 125) Financial instruments traded on an organized trading facility (OTF) (Article 2(1)(c))

B.2.06  The Market Abuse Regulation applies to financial instruments traded on an OTF (Article 3(1)(8)13). As in Article 2(1)(a), the request for admission is also already sufficient.14

Other financial instruments (Article 2(1)(d))

B.2.07  The Market Abuse Regulation also applies to all financial instruments not covered by Article 2(1)(a), (b), or (c), the price or value of which depends on or has an effect on the price or value of a financial instrument referred to in those points. As examples, Article 2(1)(d) states that these include credit default swaps and contracts for difference, without limiting the scope of application to these financial instruments. This extension of the scope of application of the Market Abuse Regulation is necessary, owing to the fact that many financial instruments refer to the value or price of other financial instruments traded on regulated markets, MTFs, or OTFs. Since the use of insider information, their unlawful disclosure or the manipulation of these financial instruments not traded on a market covered by the Market Abuse Regulation would not constitute a market abuse in regulated markets, MTFs, or OTFs and such behaviour would not be punishable or forbidden by the Market Abuse Regulation. To protect the integrity of the markets where these financial instruments are traded, Article 2(1)(d) also extends the scope of application to these financial instruments.

Extension to regulated markets of emission allowances (Article 2(1) subs. 2)

B.2.08  Finally, the Market Abuse Regulation applies also to regulated markets of emission allowances or other auctioned products, even when the auctioned products are not financial instruments. In particular, but not exclusively, greenhouse gas emission allowances under the Greenhouse Gas Emission Allowances Regulation (1031/2010/EU) are covered. In contrast to the regulation on the scope of application for financial instruments, Article 2(1), the regulation in Article 2(2) does not merely extend the scope of application of the Market Abuse Regulation to emissions allowances but only specifies that it should apply to behaviours or transactions relating to emissions allowances. However, particularly since the general behaviour is mentioned in Article 2(1) subs. 2, all forms of market abuse are covered. This is especially the case for orders or trades, since Article 2(1) subs. 2 sent. 2 explicitly states that the requirements and prohibitions of the Market Abuse Regulation should apply in this context.

Footnotes:

5  See n 4.

6  See n 5.

7  See n 6.

8  See n 7.

9  See art 3 n 4 ff.

10  See art 3 n 10.

11  See art 3 n 11.

12  See n 4 for further details.

13  See art 3 n 12.

14  See n 4 for further details.