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ESMA agrees with the MAR accepted market practice (AMP) on liquidity contracts proposed by Spanish regulator Comisión Nacional del Mercado de Valores (CNMV)

16 December 2016

The Opinion relates to the accepted market practice (AMP) notified by the CNMV, the Spanish securities markets regulator. This AMP refers to liquidity contracts by which a credit institution or investment firm (financial intermediary) quotes in the equity market on behalf of the issuer, with a view of reinforcing liquidity in that share. The practice would be available for all issuers. The objective of the practice is to increase or maintain the liquidity of a particular share. 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.




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. However, ESMA is nevertheless inviting the CNMV to consider whether it could address in the AMP or in a future revision of it the introduction of maximum monetary amounts capping the resources to be allocated to the execution of liquidity contract, distinguishing between the different liquidity categories of shares and the expectation that the financial intermediary performing the liquidity contract would in normal conditions be present on both sides of the order book.


MAR is intended to guarantee the integrity of European financial markets and increase investor confidence. Any unlawful behavior in the financial markets is prohibited. The concept of market abuse typically consists of insider dealing, unlawful disclosure of inside information, and market manipulation.

However, some exceptions apply. The prohibition of insider dealing and market manipulation does not apply to trading in own shares in buy-back programs or trading in securities for the stabilization of securities when some conditions laid down in MAR are met. Moreover, MAR does not apply to public authorities in pursuit of monetary, exchange rate or public debt management policy. Other specific exceptions apply in the framework of the EU’s climate policy or the EU’s Agricultural Policy for instance. MAR also provides a defense against market manipulation if the transaction was legitimate and carried out in accordance with an AMP and MAR describes the non-exhaustive factors that a competent authority should take into account before deciding whether or not to accept a market practice.