Removal of the Model Code and Disclosure Rules are among the important modifications.
On 5 November 2015, the UK Financial Conduct Authority (FCA) published its consultation paper addressing the changes it proposes to make to the FCA Handbook as a result of the implementation of the new market abuse regime under the EU Market Abuse Regulation (EU MAR). Key changes include the removal of the Model Code and the Disclosure Rules and major changes to the Code of Market Conduct.
The EU MAR was introduced to strengthen and expand the EU market abuse regime. It will repeal and replace the existing Market Abuse Directive and its implementing legislation. As an EU regulation, the EU MAR will have direct effect in the UK. The EU MAR will come into force in the UK on 3 July 2016 (save for the provisions which apply to Organised Trading Facilities and SME Growth Markets, which will apply from 3 January 2017).
The current UK market abuse regime, and related provisions, overlaps with, and extends beyond, the rules set out in EU MAR. As the EU MAR will have direct effect, the UK must ensure that its regulatory regime is compatible with, and does not conflict with, the directly effective provisions of the EU MAR. This will require significant changes to the UK regime, including the provisions of the FCA Handbook. In accordance with its statutory obligations, the FCA has published a consultation paper relating to the changes it is proposing to make to its Handbook.
It should be noted that further changes will be required to be made to the UK regulatory regime as a result of the EU MAR, including to the Financial Services and Markets Act 2000 (FSMA), and further details of the proposed changes are expected shortly. In addition, further guidelines are expected from the European Securities and Markets Authority which may affect the proposed changes to the Handbook. Finally, the FCA also proposes to consult shortly on changes to the existing guidance in the Disclosure and Transparency Rules sourcebook (the DTRs) on delaying disclosure of inside information. That consultation may also impact on the changes being considered under the current consultation.
The general approach adopted by the FCA will be to retain the existing content and structure of the Handbook to the extent that this does not conflict with the EU MAR. However, where a provision in the Handbook covers an area addressed in the EU MAR, the provision in the Handbook will be deleted, and replaced with a signpost to the relevant provision with the EU MAR. However, where there is no EU MAR equivalent to a Handbook provision, this will be retained to the extent not inconsistent with the EU MAR. In a number of cases, provisions which are retained will no longer have binding status but will instead provide guidance on the relevant provisions in the EU MAR. As a result, the Handbook will no longer provide a definitive guide to the market abuse regime which applies in the UK, and reference will also need to be made to the EU MAR and related implementing measures and guidance.
The key provisions of the Handbook which the FCA is proposing be deleted and those provisions which face substantial amendment are outlined below:
Code of Market Conduct (CoMC)
Replacing the Model Code
The full consultation paper can be found here, and the consultation period closes on 4 February 2016.
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