ESMA has issued an opinion on its accepted market practice (AMP) under Regulation 596/2014 on market abuse (MAR) covering liquidity contracts. Namely, circumstances entailing an issuer entering an agreement with a financial intermediary entrusted with the task of enhancing the liquidity of the issuer’s financial instruments.

Four competent authorities notified ESMA of their AMPs relating to liquidity contracts, with certain differences between them. ESMA is seeking a relatively common approach at European level.

Its principals for such AMPs include that: the instruments covered should be shares admitted to trading on regulated markets and MTFs in the Member State seeking to establish the AMP, excluding those unilaterally listed by the venue; the AMP should be in written form; the performance of the contract should be limited to members of and on the national trading venues where the instruments are traded; the AMP should distinguish between liquid and less liquid instruments; and relevant trading conditions and limits should be considered and applied.

If members have any questions or comments, please contact Adam Jacobs-Dean, Oliver Robinson or Adele Rentsch.