Since July 1, 2016, the EU Market Abuse Regulation (MAR) has been in force. We asked market-listed companies in Germany: have the right measures been taken to ensure greater transparency and investor protection in the EU’s capital markets? Or do the regulations go beyond their goal? Opinions vary. But what is clear after 3 months of MAR is that many questions remain.

Nine out of ten companies want more support from supervisory authorities

Nine out of ten companies would like supervisory authorities to assist them in implementing the new requirements, either with guides or FAQs. Only 2% of the participants in our survey feel they don’t require further support.

48% of the respondents are convinced that MAR regulations overshoot their intended goal

Fifty-two percent of the companies view the organisational effort that MAR entails as “substantial”. A further 46% see a “certain additional expenditure.”

However, it is alarming that just 9% of issuers consider the extent of MAR as appropriate to create more transparency on the capital market. 48% criticise the regulations for excessively overreaching their target. A further 9% complain that the measures even overshoot its intended topics.

“Overworked bureaucracy, which might keep smaller companies from stock exchange listing”

Smaller issuers in particular will not want to expose themselves to the risks of errors in the application of MAR, a study participant suggests. At least 10 de-listings have occurred on the German market in 2016 which were due to MAR’s increased requirements on companies. Every fifth company surveyed considered de-listing due to the market abuse regulation. In addition to the more stringent list of penalties, MAR’s lack of clarity played a significant role in company de-listing.

MAR rules leave too much room for interpretation

More than 80% of the issuers (also from the regulated market) see too much scope for interpretation in MAR’s legalities. 14% agree fully with the statement “I have difficulty assessing whether a piece of information in my company is insider information or not,” while 41% agree in part with the statement. Only 23% of those surveyed responded that the statement “didn’t really” reflect their position and a mere 3% responded that the statement didn’t reflect their opinion “at all.”

For example, companies remain uncertain in how to deal with provisional figures which are significantly above or below forecasts. While 39% of issuers would publish an ad-hoc announcement, 20% would postpone the announcement until figures are completely verified.

Even the archiving of signed letters of instruction for persons close to management is not clearly defined for many. At 47%, managers must assume this responsibility. At 53%, the company must.

An Insider is not Always an Insider

The distinction between permanent and project-related insiders (47%) is also unclear, as is the precise definition of the start time of an insider project (67%). In addition, issuers often encounter resistance or incomprehension when they request personal data required by MAR.

Conclusion:

The survey shows that most issuers feel MAR is an aggravation in practice. National supervisory authorities, such as BaFin and FMA, should therefore help companies quickly — for example, with revised guides. In this way, uniform implementation of the rules can be ensured, creating more transparency in EU capital markets.