How will Brexit affect the Market Abuse Regulation?
It is right to ask the question, “why should I bother setting up a system to monitor Insiders as these rules came from the EU and the UK is going to leave?”
History of UK Market Abuse Regulation
To answer that question it’s worth considering the historical position. Insider dealing was first made a criminal offence in 1980 through sections 69 – 73 of the Companies Act 1980. Later this was re-enacted in the Company Securities (Insider Dealing) Act 1985. Insider Trading laws were then amended by the Financial Services Act 1986, the Criminal Justice Act 1993 (to implement an EU Directive), and the Financial Services and Markets Act 2000.
Suffice to say, laws against insider trading have been around for more than 35 years.
Data requirements and retention is where the difference lies
Prior to the introduction of the Market Abuse Regulation in July 2016, the provisions on the retention of insider lists was contained in section 2.8.1 of the Disclosure and Transparency Rules. These rules weren’t that prescriptive, they merely required the keeping of lists which record the identity of each person possessing inside information, the reason they were on the list and the date the list was created and updated.
As can be seen in other briefings, the Market Abuse Regulation is more prescriptive and requires the keeping of a specific (and lengthy) list of identity fields. Also, a company’s Insider List must be recorded in a way that allows the company to provide a snap-shot of that list at any point in the last five years.
Process: The Government’s plan for our post Brexit life is to introduce a “Great Repeal Act”. In one stroke this will actually write all EU law onto the UK statute books. As a result, the provisions of the Market Abuse Regulation will remain in force along with many decades of EU law which will simply be cut and pasted into UK law.
Early repeal? Of course, after this date it is reasonable to assume that the Government will start a very lengthy process of repealing or amending the laws they have just introduced. Quite clearly this will take some considerable time (years) as each change is drafted, its ramifications considered by a drafting team, it is then put before both houses of parliament, debated, amended etc.
How high up the agenda will MAR repeal (or amendment) come? Well it certainly wouldn’t be much of a vote winner!
As a result, the likelihood that the Insider List provisions of MAR will be removed any time soon is very small.
Soft Brexit: This likelihood gets even smaller if a “soft brexit” approach is accepted; certainly, MAR could be retained in the UK as part of a negotiation intended to ensure access to EU financial markets.
Yes, there is the possibility that the EU derived Insider List provisions will eventually be repealed. We believe that this is quite unlikely. If it does happen, it is likely it will be many years from now. In the meantime, the full provisions apply.