On December 13, the European Securities and Markets Authority (ESMA) published their second annual report on the application of the accepted market practice (AMP) regime under the Market Abuse Regulation (MAR). The annual report is available here.

Under MAR, it is illegal to engage in market manipulation on any trading venue in the EU and UK. AMPs are a defense against an allegations of market manipulation, in that the national financial regulator can designate that certain behavior may be “carried out for legitimate reasons,” and is therefore not considered to be market manipulation.

ESMA is required to produce an annual report on the functioning of the AMP regime. In the report for 2019, ESMA noted the existing AMPs and commented on their application:

  • four jurisdictions (Spain, Portugal, Italy and France) have AMPs for liquidity contracts, whereby an investment firm is paid by an issuer to trade shares with the sole purpose of improving the liquidity of those shares. France is by far the most active user of this AMP, with the French regulator reporting 434 active contracts in July 2019; and
  • Italy has two other AMPs — for bond buybacks and for the purchase of own shares to set up a shares warehouse position.

No other jurisdictions have made use of the AMP regime to date.