The EU Permanent Representatives Committee approved on 26 June 2013 on behalf of the Council, a compromise reached with the European Parliament on a draft regulation aimed at tackling insider dealing and market manipulation on securities markets.
The draft regulation, together with a proposed directive on criminal sanctions, is aimed at enhancing market integrity and the protection of investors as well as amending and replacing an existing directive on market abuse (2003/6/EC). The latter directive prohibits insider dealing and the manipulation of financial instruments that are admitted to trading on regulated markets. However, the emergence of new trading venues as well as over-the-counter (OTC) trading have brought more competition to regulated markets, making it more difficult to monitor for possible market abuse.
The new market abuse regulation thus extends the scope of the rules to financial instruments traded on new more recently-created venues such as multilateral trading facilities and organised trading facilities and OTCs and adapts rules to new technology such as High Frequency Trading.
The manipulation of benchmarks, such as LIBOR, will be explicitly prohibited and subject to administrative sanctions.
Market abuse occurring across both commodity and related derivative markets will also be prohibited, and cooperation between financial and commodity regulators will be reinforced.
A number of measures will be introduced to ensure regulators have access to the information they need to detect and sanction market abuse. Since the sanctions currently available to regulators often lack a deterrent effect, tougher and more harmonised sanctions will be introduced.
Moreover, these rules are set to reduce the administrative burden on SME issuers.
For more information on this topic you can either get in touch with us or click here to be redirected to the draft regulation.