REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL Exemption for the Bank of England and the United Kingdom Debt Management Office under the Market Abuse Regulation (MAR)
Date: 2019-01-30
Institutions: Directorate-General for Financial Stability, Financial Services and Capital Markets Union, European Commission, European Union
Subjects: United Kingdom, central bank, confidentiality, exchange policy, financial instrument, insider trading, public debt, public institution, stock-exchange transaction, withdrawal from the EU

EN 

  EN 

   EUROPEAN COMMISSION  Brussels, 30.1.2019  COM(2019) 68 final  REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL Exemption for the Bank of England and the United Kingdom Debt Management Office under the Market Abuse Regulation (MAR)          
 
 
1.  INTRODUCTION  

Article 6(1) of Regulation (EU) No 596/2014 on market abuse (hereinafter: "MAR")1 exempts 
transactions,  orders  or  behaviour  by  Member  States,  including  members  making  up  the 
federation  in  the  case  of  a  Member  State  that  is  a  federal  state,  members  of  the  European 
System of Central Banks (ESCB), ministries and other agencies and special purpose vehicles 
of  one  or  several  Member  States  or  persons  acting  on  their  behalf  from  the  application  of 
MAR  insofar  as  they  are  undertaken  in  pursuit  of  monetary,  exchange  rate  or  public  debt 
management policies. 

Pursuant to Article 6(5) of MAR, such an exemption for operations undertaken in the public 
interest from the scope of MAR may be extended, by virtue of a Commission's delegated act 
adopted in accordance with Article 35 of MAR, to certain public bodies and central banks of 
third countries. In that context and according to the second paragraph of Article 6(5) of MAR, 
the  Commission  was  required,  by  3  January  2016,  to  prepare  and  present  to  the  European 
Parliament and to the Council a report assessing the international treatment of public bodies 
charged  with,  or  intervening  in,  public  debt  management  and  of  central  banks  in  third 
countries. 

For  this  purpose  the  Commission  commissioned  an  external  study  from  the  Centre  for 
European  Policy  Studies  (CEPS)  and  the  University  of  Bologna  on  "Exemptions  for  third-
country central banks and other entities under the Market Abuse Regulation (MAR) and the 
Markets in Financial Instruments Regulation (MiFIR)".2 The study is based on a survey and 
desk  research.  It  analyses  market  abuse  frameworks  and  risk  management  standards 
applicable  to  central  banks  and  debt  management  offices  (hereinafter:  "DMO")  of  13  third-
country jurisdictions. These jurisdictions were chosen as matter of priority based on, among 
other  criteria,  their  qualification  as  systemically  important  financial  sectors.  To  assess  the 
necessity and appropriateness of granting an exemption under Article 6(5) of MAR, the study 
evaluates a set of market abuse rules  and risk management standards against the “European 
benchmark”, which is based on corresponding rules and standards applicable in the European 
Union and its Member States. 

The  Commission  presented  its  report  required  under  Article  6(5)  of  MAR3  to  the  co-
legislators  on  16  December  2015.  In  accordance  with  the  conclusions  of  that  report,  the 
Commission  adopted  the  Delegated  Regulation  (EU)  2016/5224  on  17  December  2015, 

1 Regulation (EU) No 596/2014 of the European Parliament and of the Council of 16 April 2014 on market abuse 
(market abuse regulation) and repealing Directive 2003/6/EC of the European Parliament and of the Council and 
Commission Directives 2003/124/EC, 2003/125/EC and 2004/72/EC (OJ L 173, 12.6.2014, p. 1). 
2 https://www.ceps.eu/publications/study-exemptions-third-country-central-banks-and-debt-management-
offices-under-mifir  
3  Report  from  the  Commission  to  the  European  Parliament  and  the  Council  on  the  International  Treatment  of 
Public  Bodies  Charged  with,  or  Intervening  in,  Public  Debt  Management  and  of  Central  Banks  in  Third 
Countries under Regulation (EU) No 596/2014 on Market Abuse [COM(2015) 647 final]. 
4  Commission  Delegated  regulation  (EU)  2016/522  of  17  December  2015  supplementing  Regulation  (EU)  No 
596/2014  of  the  European  Parliament  and  of  the  Council  as  regards  an  exemption  for  certain  third  countries 
public bodies and central banks, the indicators of market manipulation, the disclosure thresholds, the competent 
authority  for  notifications  of  delays,  the  permission  for  trading  during  closed  periods  and  types  of  notifiable 
managers' transactions (OJ L 88/1, 5.4.2016,). 

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extending the exemption from the scope of MAR to specified public bodies and central banks 
of those third-country jurisdictions analysed in its report. 

2.  THE REPORT'S LEGAL BASIS: ARTICLE 6(5) OF MAR 

Article  6(5)  subparagraph  2  of  MAR  required  that  by  3  January  2016  the  Commission 
prepares  and  presents  to  the  European  Parliament  and  to  the  Council  a  report  assessing  the 
international  treatment  of  public  bodies  charged  with,  or  intervening  in,  public  debt 
management and of central banks in third countries. 

In terms of content of the report, Article 6(5) subparagraph 3 of MAR sets out that that the 
Commission's report should include a comparative analysis of the treatment of public bodies 
charged  with,  or  intervening  in,  public  debt  management  and  central  banks  within  the  legal 
framework of third countries and the risk management standards applicable to the transactions 
entered into by those bodies and central banks. Furthermore, Article 6(5) subparagraph 3 of 
MAR provides that if the report concludes, in particular in regard to the comparative analysis, 
that the exemption of the monetary responsibilities of those third-country central banks from 
the  obligations  and  prohibitions  of  MAR  is  necessary,  the  Commission  should  extend  the 
abovementioned exemption also to the central banks of those third countries. 

In December 2016, the Commission adopted the report required under Article 6(5) of MAR as 
well as the Delegated Regulation 2016/522 that listed entities covered by the extension of the 
exemption from the scope of application of MAR. 

The  United  Kingdom’s  treatment  of  debt  management  offices  and  central  banks  within  its 
legal  framework  as  well  as  the  risk  management  standards  applicable  to  the  transactions 
entered into by those entities was not considered in the above-mentioned report and delegated 
regulation  due  to  its  status  of  a  Member  State.  However,  in  light  of  the  United  Kingdom’s 
approaching  change  of  status  to  a  third  country  it  is  now  appropriate  to  present  to  the 
European Parliament and to the Council a report pursuant to Article 6(5) of MAR analysing 
the appropriateness of extending the exemption from the scope of MAR to relevant entities of 
that country. 

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3.  ANALYSIS OF THE APROPRIATNESS OF THE EXTENSION OF EXEMPTION 

TO THE UNITED KINGDOM 

3.1. Criteria used for the assessment 

Given  the  significant  volume  of  transactions  within  scope  of  MAR  that  originate  from  the 
United  Kingdom,  there  is  a  clear  case  for  assessing  the  appropriateness  of  extending  the 
Article 6 exemption to its central bank and, if applicable, its public bodies charged with, or 
intervening in, public debt management. Entities clearly falling in the scope of this assessment 
are the Bank of England and the United Kingdom Debt Management Office. 

The analysis is based, firstly, on the assessment of a set of market abuse rules applicable in 
the United Kingdom. These include, in particular, rules on: 

insider dealing and unlawful disclosure of information;  

(i) 
(ii)   market manipulation 
(iii)  

exemption from market abuse regulation 

Secondly, the analysis includes an assessment of risk management standards, which include 
internal arrangements, systems and procedures aimed at preventing that staff members carry 
out transactions or orders, or engage in behaviour, directly or indirectly, on their own account. 
These include, among others rules of conduct on the following issues: 

(i) 
(ii) 
(iii) 
(iv) 

use of confidential information by staff members  
transactions in assets and financial instruments by staff members 
staff independence and conflicts of interest 
enforcement of rules of conduct 

The  analysis  relies  on  the  conclusions  of  the  study  undertaken  by  the  CEPS.  Although  the 
study examines the above-mentioned rules applicable in the United Kingdom in the context of 
its status as a Member State, it nevertheless provides all the information necessary to assess in 
a comprehensive manner the appropriateness of extending the Article 6(1) exemption to the 
Bank of England and the United Kingdom Debt Management Office. 

For a detailed description of all the elements considered in the analysis, please refer back to 
the study by CEPS. 

3.2. Summary of the analysis for the United Kingdom 

Market abuse regime 

MAR rules are currently directly applicable in the United Kingdom as it is a Member State. 
Since MAR is at the core of the Union’s market abuse framework it follows that the United 
Kingdom  provides  for  appropriate  rules  on  insider  dealing,  unlawful  disclosure  of  inside 
information and all forms of market manipulation as well as on exemptions from the market 
abuse regime. However, since the United Kingdom is in the process of withdrawing from the 
European Union, it is appropriate to consider foreseeable future changes it might make to its 
market abuse regime. In that regard, from the explanatory information accompanying the draft 

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statutory  instrument  “The  Market  Abuse  (Amendment)  (EU  Exit)  Regulations  2018.”5  it 
appears there is a clear intention by the government of the United Kingdom not to make any 
policy changes to its market abuse regime, as established by MAR, in the near future, other 
than where appropriate to reflect the country’s new position outside the EU, and to smooth the 
transition. 

Risk management standards 

The  Bank  of  England  applies  extensive  risk  management  rules  with  regards  to  transactions, 
orders or behaviour, in pursuit of monetary, exchange rate or public debt management policy. 
These rules subject staff members to a duty of professional secrecy and prohibit disclosure of 
inside information as well as its use for personal gain. Furthermore, there are internal conduct 
rules  laying  down  restrictions  on  transactions  in  assets  and  financial  instruments  by  staff 
members, rules governing conflicts of interest as well as clear rules on reporting lines in case 
of  application  of  any  of  rules  of  conduct.  Finally,  the  Bank  of  England  has  disciplinary 
procedures in place sanctioning failure to comply with the said rules. 

The United Kingdom Debt Management Office has a robust system of conduct rules applying 
to its staff members. Most of them are contained in the Civil Service Management Code. As 
other civil servants, staff members of the Office are required to maintain professional secrecy 
and avoid using inside information to advance their private financial interests. Staff members 
may  not  invest  in  shareholdings  and  other  securities  if  such  investments  are  contrary  to  the 
nature of their work. Furthermore, applicable rules on conflict of interest prevent them from 
being involved in any decisions which could affect the value of their investments. The Office 
has in place disciplinary procedures for breaches of staff rules as well for other situations in 
which  actions  of  staff  members  disrupt  or  damage  the  performance  or  reputation  of  the 
organisation. 

4.  CONCLUSIONS 

On  the  basis  of  the  information  obtained  and  the  analysis  carried  out,  the  Commission 
concludes that it is appropriate to grant an exemption from MAR requirements to the central 
bank  and  DMO  of  the  United  Kingdom,  namely  the  Bank  of  England  and  the  United 
Kingdom Debt Management Office once the United Kingdom becomes a third country. 

Finally, this conclusion is without prejudice to possible changes in the future, having regard to 
changes of third-countries' legislation or changed factual circumstances which may trigger the 
need for a review of the list of exempted third country central banks and DMOs. 

5 https://www.gov.uk/government/publications/draft-market-abuse-amendment-eu-exit-regulations-2018  

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