ESMA publishes opinion on CMVM’s MAR accepted market practice on liquidity contracts

Market Abuse

Date: 06 October 2017

On 27th September 2017, the European Securities and Markets Authority (ESMA) published an opinion on the accepted market practice (AMP) notified by the Comissão do mercado de valores mobiliários (CMVM) of Portugal, which replaces the AMP under the Market Abuse Directive established on August 2008.

This AMP refers to liquidity contracts by which a credit institution or an investment firm (financial intermediary) quotes in the Portuguese equity market on behalf of the issuer, with a view to enhancing the liquidity of a particular share and its regular trading. In that respect, it would ultimately benefit investors, in the sense that the likelihood of finding a counterparty for entering or exiting a position in that share would increase. This practice is available to all issuers who have requested admission to trading or approved the trading of their shares on a Portuguese market.

ESMA considers that the proposed AMP on liquidity contracts is compatible with MAR and with its technical standard on AMPs, and contains various mechanisms to limit the threat to market confidence. ESMA also notes that the proposed AMP incorporates all the conditions and limits set out in its Opinion on liquidity contracts issued in April.