Tuesday, 25 October 2011

Europe: insider dealing and market manipulation - Commission proposes Regulation and Directive

Last week the European Commission published proposals for a Regulation and a Directive on insider dealing and market manipulation: see, respectively, here (pdf) and here (pdf). The accompanying press releases are available here and here. Further background information is available here, including some FAQs.

The purpose of the Regulation is, amongst other things, to clarify which financial instruments and markets are covered by the market abuse regime and to extend its reach to include instruments admitted to trading only on a multilateral trading facility and other new types of organised trading facilities. The regime will also be extended to include attempts at market manipulation. A separate offence of attempted insider dealing is contained in the Regulation (the existing definition of insider dealing, in the Market Abuse Directive (2003/6/EC), already contains elements of attempted behaviour).

The Directive is particularly noteworthy because it is the first Commission proposal based on new Article 83, paragraph 2, of the Treaty on the Functioning of the European Union, which provides that Directives may be used to establish minimum rules regarding the definition of criminal offences and sanctions if this is essential for the effective implementation of EU policy in an area that has been subject to harmonisation measures. The Commission's proposed Directive sets out minimum rules regarding criminal sanctions for serious cases of market abuse.

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