December 13, 2019

ESMA Highlights Increase in Suspicious Transaction and Order Reports

The European Securities and Markets Authority (ESMA) has published a peer review report on how national competent authorities (NCAs) manage suspicious transactions and order reports (STOR) under the Market Abuse Regulation (MAR). 

The Report sees a significant increase in STORs and finds that national supervisors can do more to ensure that all financial participants play their part in combatting market abuse.

During the final year of the Market Abuse Directive there were 4,634 reports. After the introduction of MAR in mid-2016, NCAs have received 10,653 STORs in 2017, rising to 11,130 STORs in 2018. In addition, in 2018, NCAs received 1,560 other notifications of alleged market abuse, such as consumer complaints, whistle-blower reports.

Persons professionally arranging or executing transactions, investment firms and trading venues need to report STORs to their NCA, so those authorities can analyse suspicious behaviours and investigate possible cases of insider dealing or market manipulation.

“Suspicious transactions and orders reporting is an important tool to fight market abuse. Both regulators and market participants need to play their role when it comes to detecting and reporting suspicious activity to support the prevention or investigation of market abuse,” said Steven Maijoor, ESMA Chair. “Our review highlights good examples of NCAs’ supervision and enforcement of STOR requirements. However, we as European regulators need to make further progress in ensuring firms’ compliance and in challenging poor-quality reporting.”

ESMA recommends measures to further strengthen STOR supervision, where NCAs ensure that all financial players subject to the STOR requirements are complying with the STOR requirements. They also recommend that NCAs enhance their focus on suspected non-reporting/poor-reporting of STORs including, where appropriate, enforcing and sanctioning non-compliance.

– Overall, six NCAs were assessed as fully complying in at least four of the six assessment areas, namely those from Belgium, France, Italy, the Netherlands, Portugal and the United Kingdom.

– 11 NCAs were assessed as partially-compliant (Austria, Bulgaria, Greece, Iceland, Ireland, Latvia, Liechtenstein and Luxembourg) or non-compliant (Cyprus, Norway and Romania) in their supervision of the STOR requirements by certain financial players.

– 13 NCAs were assessed as partially compliant (Croatia, Denmark, Estonia, Greece, Iceland, Latvia, Lithuania, Malta, Poland, Romania and Slovakia) or non-compliant (Cyprus and Liechtenstein) in their response to poor-quality or suspected non-reporting of STORs and associated enforcement actions.

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