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The European Securities and Markets Authority (ESMA) and the respective National Competent Authorities in EU countries have announced that they are raising awareness of requirements established by the Market Abuse Regulation (MAR) which apply when posting investment recommendations on social media.

The regulators are also warning about the risks of market manipulation in such publications.

When posting on social media, transparency and accuracy are key, especially when making recommendations about investments. That is why, if you are a finance influencer, a technical expert, or someone with just interest in financial investments, you need to be aware of the rules established under the MAR Framework and be able to recognise an investment recommendation.

What is an Investment Recommendation?

According to the MAR it can be any post, video, or any other type of public communications, including social media, in which a person gives advice or ideas, directly or indirectly, about buying or selling a financial instrument or on how to compose a portfolio of financial instruments.

Even if a person is using “non-technical” language, gives advice or ideas, directly or indirectly, about buying or selling a financial instrument or on how to compose a portfolio of financial instruments, it may constitute an investment recommendation.

Where are the rules set out?

In the MAR Framework, composed of Regulation No 596-2014 and the relevant Delegated and Implementing Regulations.

What are the specific requirements?

The general set of requirements require any person producing investment recommendations to:

  • Include the identification of the producers of the recommendation: name, job title of all the persons involved, and the date and time of the recommendation.
  • Ensure the objective presentation of investment recommendations: facts clearly distinguished from interpretations, estimates and opinions. Confirm all sources of information are reliable and, where in doubt, clearly indicate it.
  • Disclose any conflicts of interest in a clear way, so investor would take notice of it. When recommendations are voiced via different social media channels, each of them must include a disclosure of interests or conflicts of interest.

The additional requirements require “professionals” and “experts” to disclose:

  • A summary of any basis of valuation/methodology and the underlying assumptions used.
  • The length of time of the investment and an appropriate risk warning.
  • The planned frequency of updates to the recommendation.
  • If the recommendation has been amended after being disclosed to the issuer.
  • If they hold a net long or short position above 0.5% of the total issued share capital of the issuer.

What happens if you do not comply?

You are exposed to sanctions. National Competent Authorities can impose administrative or criminal sanctions that may vary according to the member state for certain types of infringements.


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