EU Market Abuse Regulation: Insider Dealing and Manipulation

The European Union's Market Abuse Regulation (MAR), Regulation (EU) No 596/2014, defines the core market abuse offences that apply to firms and individuals dealing in EU markets, including in Ireland. This guide explains the text of Articles 8, 9, 10, 12, 14, 15 and 16 as shown in the consolidated version dated 9 January 2024. It builds on our guides to market abuse foundations and to insider trading, and supports our Market Manipulation and Trading Red Flags course overview.

Article 8: insider dealing

Article 8 says insider dealing occurs when a person who possesses inside information uses that information by acquiring or disposing of related financial instruments, for their own account or for the account of a third party. Cancelling or amending an order placed before the person held the information also counts. Recommending or inducing another person to deal on the basis of inside information is insider dealing where the person knows or ought to know that the recommendation is based on inside information. The article covers people who hold inside information through board membership, shareholdings, employment or duties, or criminal activity, and anyone else who knows or ought to know that it is inside information.

Article 9: legitimate behaviour

Article 9 lists cases where possessing inside information does not by itself establish insider dealing. These include a legal person that had effective internal arrangements to keep inside information from the decision-maker, market makers and authorised counterparties acting legitimately in the normal course of their function, and a transaction made in good faith to discharge an obligation that arose before the person held the information. It also covers use of information obtained in a public takeover or merger solely to proceed with it, though not for stake-building. The protection falls away if the competent authority establishes an illegitimate reason for the orders or transactions.

Article 10: unlawful disclosure

Article 10 says unlawful disclosure occurs when a person with inside information discloses it to any other person, except where the disclosure is made in the normal exercise of employment, profession or duties. Onward disclosure of a recommendation or inducement is also unlawful where the person knows or ought to know it is based on inside information.

Article 12: market manipulation

Article 12(1) defines four types of manipulation:

• transactions, orders or other behaviour that give, or are likely to give, false or misleading signals about supply, demand or price, or that secure prices at an abnormal or artificial level;
• transactions, orders or activity affecting prices that use a fictitious device or any other form of deception or contrivance;
• disseminating information, including rumours, that gives false or misleading signals or secures prices abnormally, where the person knew or ought to have known it was false or misleading; and
• transmitting false or misleading benchmark inputs, or otherwise manipulating a benchmark's calculation.

Article 12(2) gives non-exhaustive examples, including acting alone or in concert to secure a dominant position, buying or selling at market open or close to mislead investors, order placement and cancellation, including by algorithmic and high-frequency strategies, that disrupts trading or creates false signals, and voicing opinions in the media while holding positions and profiting from the impact without disclosing the conflict. Article 12(1)(a) refers to a legitimate-reasons and accepted-market-practice defence in Article 13.

Articles 14 and 15: the prohibitions

Article 14 prohibits engaging or attempting to engage in insider dealing, recommending or inducing another person to do so, and unlawfully disclosing inside information. Article 15 prohibits engaging or attempting to engage in market manipulation.

Article 16: prevention and detection

Article 16 places duties on firms. Market operators and investment firms that run a trading venue must maintain effective arrangements to prevent and detect insider dealing and market manipulation, and report orders and transactions that could constitute such conduct to the competent authority without delay. Persons professionally arranging or executing transactions must maintain arrangements to detect and report suspicious orders and transactions, whether on or outside a venue, and must notify the competent authority without delay where there is a reasonable suspicion. Notifications go to the authority of the Member State where the person is registered or has its head office, or where the branch is situated.

Using this in a compliance role: our suggestions

These steps are our suggestions, not requirements in the regulation.

• Check that surveillance alerts are reviewed against the Article 12(2) examples, not only price movements.
• Record why a "reasonable suspicion" decision was taken or not taken, since Article 16 turns on that threshold.
• Check that information barriers can be evidenced, because Article 9 protection depends on effective arrangements.

For structured learning, browse our CPD courses.

What we could not confirm

We read only the first part of the consolidated text, so we have not covered later articles or the regulatory technical standards on the content of suspicious order reports. The text we read did not use the abbreviation STOR. This regulation is the EU version, and the UK's own market abuse regime, differs in some respects, as our guide to the FCA MAR rules shows, so do not assume the same text applies to UK firms. This post is general information, not legal advice.