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The Association for Financial Markets in Europe (AFME) participated in the consultation process in relation to the technical standards to the Market Abuse Regulation (596/2014) (“MAR”) and addressed its key concerns with respect to the provisions and commentary detailed within the Consultation Paper.
Based on MAR Level 1, AFME fundamentally disagrees with the view that a market sounding conducted as proposed is not within a safe harbour. AFME does not understand the rationale for the conclusion that a market sounding is not within a safe harbour, particularly given the wording of Recital 35 MAR. AFME strongly encourages this view to be reconsidered.
The organization is of the view that investment recommendations, originating from inside the sales or trading department of an investment firm or credit institution expressed to their clients and which are not likely to become publicly available, should not be considered investment recommendations for the purposes of MAR. Implementing the current proposals without change would have a material impact on investment communications between investment firms and investors with whom they have existing relationships as well as on research firms. Liquidity in some investments would also be impacted. These unintended consequences run contrary to the EU efforts to strengthen SME markets.
AFME is also concerned with the vast amount of personal and private information which is required to be held on insider lists. It considers this to be disproportionate to the aims of keeping such a list and further it poses a serious data protection concern.
The members of AFME strongly oppose the provisions which require firms to provide their investment research free of charge, where it has been referred to in a non-written recommendation, considering this to be unfair and contrary to commercial practice in all sectors.