Materiality in MAR: A Critical and Comparative Analysis

Abstract

The two most important aspects of securities regulation, disclosure obligations and insider trading prohibitions, are both premised on the requirement that issuers have to share material information with the public or otherwise guarantee that insiders will abstain from trading on the basis of this information. Hence, the determination of what constitutes material information is a crucial element of securities regulation. Investors are particularly curious about events that will influence the corporation in the future. Therefore, designing a test to determine when unfolding events become material is an important but also particularly challenging task. This article offers a critical analysis of the European materiality test, developed within the framework of the Market Abuse Regulation (MAR). The article offers insights from an in depth comparison of the European test and its equivalent U.S. test, and then goes on to point out the European test’s inherent weaknesses.

Keywords: securities regulation, European Market Abuse Regulation, comparative law, disclosure, insider trading, materiality, corporate governance, cross-border mergers and acquisitions