Insider Dealing & Market Manipulation

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Inside information

What are the defining characteristics of inside information under MAR?: Information of a precise nature, that has not been made public, relating to an issuer or financial instrument, which if made public would be likely to have a significant effect on the prices of the relevant instruments.
What does 'precise nature' mean under MAR?: A set of circumstances that exists or may reasonably be expected to come to exist, specific enough to permit a conclusion about the price effect — so ongoing merger negotiations can be inside information before a deal is signed.
What extra form of inside information applies to persons executing client orders?: Exam material: information conveyed by a client about its pending orders which, if made public, would significantly affect prices. Since 4 December 2024 this also covers such information passed on by a person acting for the client, and information known from managing a proprietary account or a managed fund. Trading ahead of it (front-running) is insider dealing.
Which markets does MAR's inside information cover, and when is information 'made public'?: Financial instruments, including commodity derivatives and related spot commodity contracts, and emission allowances and products based on them. Exam material: information is 'made public' when investors inside or outside the Republic know of it, when it can be easily and lawfully obtained or when it is in public archives. Since 3 July 2016 (MAR, as the Court of Justice confirmed on 16 April 2026 in Case C-229/24) it is made public only when disclosed in the way issuers must disclose it: widely, free of charge and simultaneously throughout the EU.

Insider dealing

What constitutes insider dealing, and how do order amendments fit in?: Acquiring or disposing of instruments to which inside information relates, for one's own or a third party's account. It also captures the amendment or cancellation of a previously placed order once inside information is received and the change is based on it.
When is 'encouraging or inducing' (tipping) an offence, and who is liable?: When a person with inside information recommends another to trade. Both are liable — the tipper for recommending, and the recipient if they trade knowing, or having reason to know, the recommendation was based on inside information.
Which four categories of persons are deemed to possess inside information?: Members of the issuer's administrative/management/supervisory body; persons with a capital holding in the issuer; persons with professional access to the information; and persons who obtained it through criminal activity.
What is the only permitted use of inside information?: Sharing it in the normal exercise of one's employment, profession or duties (e.g. a lawyer advising on an M&A deal) is lawful, and holding it is not an offence. MAR also protects certain legitimate behaviour, such as market making, executing client orders and meeting obligations that fell due earlier. The bans are on dealing, recommending or inducing, and disclosing it outside normal duties.
Name two legitimate behaviours carved out from the insider dealing prohibition.: Legitimate market making, and transactions carried out in good faith to meet an obligation that has fallen due and arose before the person had the inside information (from an order, an agreement, or a legal or regulatory duty).
When is disclosing inside information unlawful?: Whenever it is disclosed to another person, unless the disclosure is made in the normal course of the discloser's employment, profession or duties.

Market soundings

What is a market sounding, and who may conduct one?: Communicating information before announcing a transaction to gauge potential investors' interest and the conditions of a possible deal. It may be conducted by issuers, secondary offerors, emission-allowance market participants, or third parties acting on their behalf.
What must a discloser do before and around a market sounding?: Exam material: before disclosing, obtain the recipient's consent to receive inside information, tell them not to trade on it or change orders, and tell them to keep it confidential; keep records for at least 5 years and tell recipients as soon as possible when the information stops being inside. Since 4 December 2024 the three steps are the conditions of an optional safe harbour (a prior written assessment of whether inside information will be disclosed is always required), and no notice is needed if the information has otherwise been announced publicly.

Issuer disclosure

When must an issuer disclose inside information that directly concerns it?: As soon as possible, in a manner enabling fast access and a complete, correct and timely assessment. There is no fixed deadline, but incomplete disclosure still violates MAR.
Under what cumulative conditions may an issuer delay disclosure of inside information?: Exam material: immediate disclosure would prejudice its legitimate interests (e.g. ongoing negotiations), the delay would not mislead the public, confidentiality can be ensured, and the competent authority consents. Since 3 July 2016 (MAR) no consent is needed: the issuer informs CySEC, with a written explanation, immediately after publishing; consent applies only to financial-stability delays. Since 5 June 2026 the second condition is that the information is not in contrast with its latest public announcement. If confidentiality is lost, including through an accurate rumour, it must disclose as soon as possible.
What applies when an issuer intentionally discloses inside information to a third party in the normal course of business?: It must make simultaneous public disclosure to prevent selective leaking. For a non-intentional (accidental) disclosure, the standard is 'promptly'.

Insider lists

Who maintains the insider list, and what minimum data must it contain?: The issuer and any person acting on its behalf or account. It must contain at least each person's identity, the reason for inclusion, the date and time they obtained access, and the date the list was drawn up.
When is an insider list updated, how long kept, and how is it provided?: Updated promptly when a new person gains access, when a person loses access, or when the reason for inclusion changes. Kept for at least 5 years after it is drawn up or updated, and provided to the competent authority as soon as possible on request (not periodically). The issuer takes reasonable steps so that each listed person acknowledges their duties and the sanctions in writing.
What insider-list exemption applies on an SME growth market?: Exam material: issuers need not keep a formal list if insiders acknowledge their duties and a list can be supplied on request. Since 1 January 2021 SME growth market issuers keep an insider list but may limit it to persons with regular access to inside information; a Member State may require a full list.
When is a 'closely associated person' treated as an insider?: Closely associated persons matter for managers' transactions, not for the insider list. They are a spouse or equivalent partner, a dependent child, a relative who has shared the manager's household for at least one year on the date of the transaction, and an entity linked to any of them. Their own-account dealings must be notified like the manager's.

Managers' transactions

When must a manager (PDMR) notify own-account transactions, and what is the threshold?: Exam material: within three business days, to the issuer and the competent authority, once dealings reach €5,000 in a calendar year (raisable to €20,000), with publication within three working days of the trade. Since 1 January 2021 the issuer publishes within two business days of receiving the notification; since 4 December 2024 the threshold is €20,000, added without netting (regulators may set €10,000–€50,000; Cyprus applies €20,000).
What is the closed period for managers, and when may they trade within it?: Managers may not deal during the 30 calendar days before an interim or year-end report the issuer must publish. The issuer may allow trading case by case in exceptional circumstances, such as severe financial difficulty, or for deals such as employee share or saving schemes. Since 4 December 2024 both grounds also cover instruments other than shares, and the issuer must allow trades that involve no active investment decision.
Are pledges reportable, and what does the 31 January obligation cover?: Yes: pledging or lending is notifiable; a pledge made on depositing instruments in a custody account is excluded unless it secures a specific credit facility. In the exam material, the 31 January report concerns persons with qualifying holdings, not the insider list, which is kept continuously and produced on request. The 31 January duty is not a MAR rule.

Market manipulation

What constitutes market manipulation under MAR?: Exam material: transactions or false information intended to give false or misleading signals about supply, demand or price, or to secure an abnormal or artificial price, with legitimate market making excluded. Since 3 July 2016 (MAR) the test is the effect, not the intention, and there is no market-maker exemption: only trading for legitimate reasons that conforms to an accepted market practice is protected. Fictitious devices, rumours and benchmark manipulation also count.
Give two examples of manipulative conduct beyond ordinary trading.: Manipulating closing/opening prices (distorting benchmarks used by funds and derivatives), and 'pump and dump' — taking a position, then voicing biased opinions via media/social media without disclosing the conflict, to profit from the price move. Cornering a market to fix prices also qualifies.
Define momentum ignition, ping orders, and layering/spoofing.: Momentum ignition: entering orders to start/exacerbate a trend so others accelerate it, creating an exit opportunity. Ping orders: tiny orders to detect hidden liquidity. Layering/spoofing: placing orders away from the touch on one side to move the price, then executing on the other side and cancelling.

Surveillance & reporting

What must trading venue operators do, and where do suspicious reports go?: They must maintain effective arrangements to prevent and detect insider dealing and market manipulation (including attempts). Any person professionally arranging/executing transactions must file a suspicious transaction and order report (STOR) with their own national competent authority, which relays it to the venue's authority.
What is the timeline and review cycle for establishing an accepted market practice?: The competent authority must notify ESMA at least 3 months before the practice becomes active; ESMA issues an opinion within 2 months; and the practice is reviewed with a report to ESMA every 2 years. The criteria are qualitative (transparency, safeguards, liquidity) — not trading-volume thresholds.
What standards apply to investment recommendations and market-relevant statistics?: Investment recommendations must be presented objectively with any interests/conflicts disclosed; statistics and forecasts that may significantly affect markets must be disseminated objectively and transparently. Media disclosures are assessed considering press-freedom rules unless the person benefits from or intends to mislead the market.

Sanctions

What are MAR's maximum financial penalties by tier for natural and legal persons?: Exam material: top tier (insider dealing, unlawful disclosure, manipulation) €5m / €15m or 15% of turnover; middle tier (prevention and detection, public disclosure) €1m / €2.5m or 2%; lowest tier (insider lists, managers' transactions, recommendations) €500,000 / €1m. Since the Listing Act, which Member States had to apply by 5 June 2026, companies face 2% of turnover for public-disclosure failures (at least €2.5m where that is too low) and 0.8% in the lowest tier, with €1m as fallback or alternative. Cyprus law still sets fixed amounts, with no turnover percentage.
What non-financial and profit-based measures may a competent authority impose under MAR?: Disgorgement of the profits gained or losses avoided; a public warning naming the person and the infringement; withdrawal or suspension of an investment firm's authorisation; a temporary ban from management functions, longer for repeated breaches of the core prohibitions (permanent in the exam material and Cyprus law; at least 10 years under MAR since the Listing Act, which Member States had to apply by 5 June 2026); and a temporary ban on dealing for own account.

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