On 28th September, the European Securities and Markets Authority (ESMA) published its long-awaited draft Technical Guidelines for the Market Abuse Regulation (MAR), setting out how MAR will apply in practice to market participants, market infrastructures, and national supervisors. The new regulation and guidelines will have a substantial impact on market participants’ operations, aiming to increase capital markets’ transparency, safety and resilience as well as improving investor protection.
A number of firms will for the first time need to prove they have automated surveillance capabilities in place, including investment firms engaging in OTC derivative trading and algorithmic trading. Other market operators and investment firms will most likely have to re-architect their internal systems in order to comply with the detailed information capturing requirements and Suspicious Transaction and Order Reporting (STOR) requirements. ESMA has deemed that, for the large majority of cases, an automated surveillance system is the only method capable of analysing every transaction and order, individually and comparatively, and which has the capability to produce alerts for further analysis in a structured workflow.
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