The Market Abuse framework

Market Abuse consists of all the actions and practices intended to harm the integrity of financial markets and as a result discourage public confidence in securities and derivatives. The well-functioning European financial markets has proved to be a cornerstone for the Union’s economic growth.

Within this blog post, we wish to provide essential information about the Market Abuse framework, its key elements, and the importance of preventing and detecting Market Abuse activities. In addition, a complete online course regarding Compliance with Market Abuse Regulation (MAR) is available through the IforPE platform.

At the end of this post, we provide further details in relation to the knowledge and skills you will gain upon the completion of the Compliance with MAR course and how they can be employed towards fulfilling your regulatory obligations.

What is Market Abuse?

Market Abuse refers to the broad set of illegitimate activities which impair the financial market transparency and can be defined as one of the following:

• insider dealing
• unlawful disclosure of inside information
• market manipulation

Such activities can refer to any transactions, trades, or behaviour related to any financial instrument placed in a trading venue or not.

What are the key elements?

Insider dealing – involves a person who is in possession of inside information to utilise it on his own benefit or the benefit of a third party, to acquire or dispose financial instruments specifically related to the information.

Unlawful disclosure of inside information – concerns the dissemination of inside information to any other person, including public statements which fall outside of the person’s normal employment, profession, or duties.

Market manipulation – comprises of the practices that aim to provide false or misleading signals, to distort the price of one or more financial instruments. Such practices can be the placement of transactions and the dissemination of misleading information or rumours.

Prevention and detection of Market Abuse

Any action identified as Market Abuse constitutes a criminal and money laundering offence as it results in the generation of illicit assets from fraudulent activities, in one or another way.

In this respect, providers such as Cyprus Investment Firms (CIF), Crypto-Asset Services Providers (CASP), and other entities regulated by the Cyprus Securities and Exchange Commission (CySEC), are required to maintain effective arrangements and robust trading monitoring systems to tackle such activities.

More specifically, the said arrangements and systems must:

• allow for the individual and comparative analysis of each transaction executed or order placed, modified, cancelled or rejected,
• produce alerts regarding activities which require further analysis,
• cover the full range of trading activities undertaken by the persons concerned.

Any obliged entity shall be able to provide information and evidence the appropriateness and proportionality of the employed arrangements and systems, upon regulator’s request.

What is the Compliance with Market Abuse Regulation course and what does it include?

The Compliance with Market Abuse Regulation (MAR) course has been developed by SALVUS Funds and is delivered by their Risk & Compliance Director, Evdokia Pitsillidou. The course has been designed to provide professionals employed in CIF, CASP and other CySEC regulated entities with all the information on the market abuse regulatory framework and outline details relating to market abuse practices and subsequent actions required.

Undertaking the course will equip you with skills to enhance company policies and procedures, identify and examine Market Abuse related behaviours, as well as choose and maintain the appropriate trading surveillance systems for safeguarding company services and activities.

The syllabus of the Compliance with MAR course includes:

• What is Market Abuse?
• Market Abuse Regulatory Framework
• Inside information & Insider dealing
  - What is Inside information, Insider dealing, Front running, Legitimate behaviour, Market soundings
• Disclosure of Inside Information
  - What are the Issuer Obligations, Delay of disclosure with Q&As, Disclosure of inside information, Insider list, Managers’ transactions
• Market Manipulation
  - The Used Methods and Indicators of Market Manipulation, The LIBOR scandal, Accepted market practices, Prevention and detection of market abuse, Suspicious transaction and order report (STOR)
• CySEC Supervision
  - The Powers of CySEC, Administrative sanctions & penalties, Criminal offences, 2022 CySEC MAR fines, Whistleblowing

The material of the abovementioned MAR course is delivered both in PDF slides and online video recordings, an ideal way of self-paced learning. Hence, learners undertaking the course have the flexibility to learn wherever and whenever.

In addition, learners are provided with the opportunity to test the knowledge acquired through the completion of the course through test questions referencing to the covered material.

Lastly, the completion of the Compliance with MAR course counts towards the Continuous Professional Development (CPD) annual requirements of professionals holding the CySEC Advanced, Basic and/or AML certifications.