March Global Regulatory Brief: Trading and markets

Regulatory authorities continue to advance initiatives to improve financial market structures. The following market structure policy developments represent a sample of wider regulatory and policy coverage available to Bloomberg Terminal customers. Run REGS <GO> to find out more or contact your Bloomberg representative:

• India: IFSCA proposes market abuse framework
• EU: ESMA publishes decision on supplementary sovereign bonds deferrals
• Saudi Arabia: Tadawul launches ETF Market Making Framework
• Japan: JFSA proposes stronger deterrence against market misconduct

IFSCA proposes standalone market abuse framework for IFSC securities markets

The International Financial Services Centres Authority (IFSCA) has released a consultation paper proposing to introduce a dedicated regime to prohibit insider trading, market manipulation and other abusive conduct in IFSC securities markets. The proposed framework would replace the current reliance on SEBI’s domestic insider trading and unfair trade practice regulations and establish an IFSC-specific oversight regime aligned with international standards.

In more detail

• Hybrid regulatory structure: The proposal adopts a hybrid approach combining principle-based standards with detailed rule-based prohibitions. Broad principles define unacceptable conduct to address emerging risks (including algorithmic and AI-driven trading), while specific rules provide clarity on prohibited behavior.
• Scope of prohibited conduct: The framework covers:
  • Insider trading based on Material Nonpublic Information (MNPI)
  • Manipulative trading practices (e.g., misleading orders or transactions)
  • Dissemination of false or misleading market information
  • Abusive conduct relating to benchmarks and market infrastructure.
• Definition of MNPI and insiders: MNPI is defined as nonpublic information that would likely have a significant price impact if disclosed. The draft clarifies the scope of “insiders” and “connected persons,” including those with access through employment, professional engagement, contractual relationships or other associations with issuers or intermediaries.
• Restrictions on MNPI use and communication: The proposal prohibits communication, procurement or misuse of MNPI except under limited lawful circumstances (e.g., regulatory or court-mandated disclosures). Information sharing must follow strict need-to-know protocols with safeguards to prevent leakage.
• Compliance and internal controls: Listed entities and intermediaries must implement internal codes of conduct governing employee trading, maintain surveillance systems to monitor trading patterns, and, where applicable, maintain insider lists documenting access to sensitive information. Firms are responsible for monitoring employees, associates and connected parties.
• Enforcement powers: IFSCA would have authority to impose monetary penalties, issue public warnings, direct disgorgement of gains, mandate corrective measures, and in extreme cases suspend or halt trading. Sanctions must be effective, proportionate and dissuasive.

Why this matters

The proposed regime marks a structural shift toward regulatory autonomy for IFSC securities markets. By introducing a dedicated insider trading and market manipulation framework aligned with international practices, IFSCA aims to strengthen investor confidence and enhance GIFT City’s positioning as a global financial centre while ensuring flexibility to address emerging technologies and complex trading strategies.

What’s next

The consultation is open for stakeholder comments till March 27, 2026.

ESMA publishes decision on supplementary sovereign bonds deferrals under MiFIR

The European Securities and Markets Authority (ESMA) published its decision on allowing supplementary deferrals for sovereign bonds under MiFIR, alongside the list of supplementary deferrals agreed by National Competent Authorities (NCAs).

Context

Under the revised MiFIR (Article 11.3), NCAs may apply supplementary deferrals to sovereign bonds issued by their respective Member States, while ESMA is granted authority over supplementary deferrals for non-EU sovereign bonds.

With the exception of Slovakia, all NCAs and ESMA agreed a harmonized approach on supplementary deferrals, allowing the publication of the volume to be omitted until the end of the trading day for individual transactions in EU and non-EU Group 1 sovereign bonds classified as medium and liquid (“Category 1”) under the final MiFIR RTS 2.

Next steps

The new transparency framework for bonds is set to apply on 2 March 2026. However, acknowledging the short implementation time following confirmation of the supplementary deferrals regime, ESMA confirmed that the supplementary deferrals will instead apply from 4 May 2026.

Saudi Arabia launches ETF Market Making Framework

The Saudi Exchange (Tadawul) has published an ETF Market Making Framework designed to improve secondary market liquidity and price formation for listed ETFs. The framework sets standardised quoting obligations for ETF market makers across three tiers, selected by mutual agreement between the fund manager and the market maker, and offers 100% trading-fee incentives for meeting those obligations.

Key points / proposals

• Three-tier structure: The tier selection is agreed between the fund manager and market maker, with the following quoting obligations: maximum bid-ask spreads for each tier (0.65% for tier A, 1.00% for tier B, 2.00% for tier C), minimum order size of SAR 50,000, and minimum of presence of orders which is 80% of the continuous trading session. If both parties agree, the tier can be changed, subject to approval from the Saudi Exchange.
• Incentives to market makers: Daily 100% fee incentives covering Saudi Exchange, Edaa, Muqassa, and CMA commissions, conditional on meeting the obligations in the market making agreement.
• Eligible products: All listed ETFs on Saudi Exchange are eligible for market making under the framework.
• Eligibility to apply: Applicants must be either a Saudi Exchange member or a client of a Saudi Exchange member. Members may act as principal or as agent for clients, and the Exchange retains discretion to accept/reject applications and determine principal/agent permissions.
• Benefits to market makers: Zero trading fees (subject to meeting agreed obligations) and flexibility to select, as agreed with the fund manager, the most appropriate obligation tier under the three-tier structure.
• Benefits to investors: Enhanced liquidity in the secondary market, narrower bid-ask spreads, increased trading activity, and more efficient and transparent price formation across ETF products.

Implementation / Next steps

The framework was implemented early February, and to register as an ETF market maker, fund managers and market makers must jointly agree on the applicable obligation tier (A, B, or C) and submit the required application forms to the Saudi Exchange. Following review and approval, the parties execute a Market Making Agreement, after which the Saudi Exchange announces the appointment and begins ongoing compliance monitoring.

JFSA proposes stronger deterrence against market misconduct

Summary

The JFSA’s Financial System Council report, published in December 2025, proposes a comprehensive regulatory overhaul to strengthen deterrence against market misconduct. Key reforms include expanding insider trading scope to encompass target company advisors and redefining “parent companies” based on actual control. Administrative surcharges will be significantly increased by incorporating tender offer premiums and market volatility into penalty calculations. Furthermore, the report introduces surcharges for facilitating unfair trades via account lending and grants the Securities and Exchange Surveillance Commission (SESC) expanded investigatory powers over unregistered operators. Finally, it mandates the digitalization of enforcement procedures and establishes a custodian system to protect client assets during firm exits.

Context

Recent investigations by the SESC have revealed gaps in current laws, where some misconduct goes unpunished or the resulting fines are too small to deter offenders.

In response to the government’s 2025 “New Form of Capitalism” Action Plan and the SESC’s own recommendations for stronger oversight, the Minister of State for Financial Services called for a formal review. Consequently, the Market System Working Group was established to strengthen regulations, protect investors, and ensure market transparency. This report summarizes the Group’s findings after three sessions of deliberations held since September 2025.

Key takeaway

Here are the key takeaways from the Financial System Council’s report:

Expanded Insider Trading Scope: The regulations will now include advisors and contractors of the target company in a TOB, closing a loophole where only the acquirer’s side was strictly regulated.

Revised Corporate Definitions: The definition of a “parent company” is being updated to focus on actual control rather than just formal disclosures.

Increased Financial Penalties: Surcharge calculations for TOB insider trading and large-shareholding violations will be overhauled to reflect actual market premiums (e.g. approx. 50%) and price volatility (e.g. approx. 7%), ensuring fines are high enough to serve as a real deterrent.

Surcharge Calculation for High-Frequency Trading (HFT): To combat market manipulation in high-speed trading, the surcharge rounding threshold will be lowered from 10,000 yen to 1 yen, allowing authorities to capture and penalize micro-profit misconduct.

Penalties for Account Lending: Existing surcharges will be increased for individuals who trade using third-party accounts, and new penalties will be introduced for the facilitators who provide those accounts.

Strengthened Investigatory Powers: The SESC will gain the authority to compel the attendance of suspects for international cooperation and to conduct criminal investigations into unregistered operators to better police the market.

Modernization and Protection: The report mandates the digitalization of investigation procedures for greater efficiency and establishes a custodian system to ensure client assets are safely returned if a financial firm loses its registration.

Next step

The Financial System Council, an advisory body to the JFSA, provides the foundation for future legal reforms through this report. Stakeholders are expected to take the necessary actions based on the contents of this report.