Coming into effect less than a year ago, the Market Abuse Regulation (MAR) aims to bolster integrity and transparency in the industry replacing the Market Abuse Directive.
As with any continental regulatory pressure, the first few months are the most difficult – with potentially massive shifts in practice affecting wider strategy and ultimately profitability.
John Fahs, Head of Compliance for Market Regulation and Compliance for Europe’s largest generator of renewable energy, Statkraft; will be panelling at ETRC on MAR.
What are his 3 tips for implementation strategies?
Let’s start with the implementation of the suspicious trade and other reporting regulations under MAR. My main advice there is to proceed deliberately with setting the market surveillance function. By this I mean this is a significant challenge to an industry which has not had internal market surveillance mechanism in place by enlarge. It introduces a whole new formal requirement for reporting of suspicious transaction and orders. It’s important to get that right and that will involve learning how does one actually monitor a market, what is the governance around the market surveillance system meant to look like, which monitoring system should be used and what should the process of market surveillance look like.
With all this being said, I believe it’s important to proceed deliberately to avoid what can be a challenge in new implementation generating garbage in and garbage out. You don’t want to end up with loads of suspicious transactions which turn out to not be suspicious at all. You don’t want to create extra work for yourself. And at the same time, you don’t want to ruin what may be a good trading culture, a good flow of communication between the trading floor and the compliance officer. This is my advice with regards to strategic transaction and other reporting.
“My main advice there is to proceed deliberately with setting the market surveillance function.”
Under MAR, you also have the market abuse prohibition and there my main advice would be for energy companies to leverage off what they have done under REMIT because a lot of the market abuse prohibition is quite similar between MAR and REMIT. One is for physical products and the other for financial products. Of course there are differences and they need to be addressed as well.
Lastly, review routines for the way inside information is handled in respect to financial products, to ensure it is managed in accordance with MAR.
To address your own regulatory pressures head on, join us at ETRC 2017 this March 8-10 in London!
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