The Market Abuse directive (Directive 2014/57/EU of April 16, 2014 on criminal sanctions for market abuse) and regulation (Regulation 596/2014) were both published in the EU Official Journal on June 12, 2014. They seek to ensure efficient financial markets and effective enforcement of the rules, as well as strengthening investor protection and confidence, by harmonising criminal sanctions. These may be imposed in addition to administrative sanctions in cases of market manipulation, insider dealing, recommending or inducing another person to engage in insider dealing and unlawful disclosure of inside information.
The directive applies in particular to financial instruments traded (or for which a request for admission has been made) on a regulated market, MTF or OTF, or other financial instruments whose price or value depends on, or has an effect on, the price or value of financial instruments such as credit default swaps and contracts for difference. The directive also applies to behaviour or transactions, including bids, relating to the auctioning of emission allowances or other related products on an auction platform authorised as a regulated market, even if these are not financial instruments, according to Commission Regulation (EU) No 1031/2010. Provisions in the directive referring to orders to trade also apply to bids submitted at an auction, except where auction bids are dealt with explicitly.
Member states must ensure that insider dealing and market manipulation are punishable by a maximum prison term of at least four years and unlawful disclosure of inside information is punishable by a prison term of at least two years, and they should also introduce sanctions such as fines or judicial winding-up. While the directive sets out minimum rules, EU members are free to adopt or keep more stringent criminal market abuse rules.
Member states must adopt and publish the required legislation, regulations and administrative provisions to comply with the directive by July 3, 2016, the date at which the measures should be applied, subject to the entry into force of the regulation. The UK and Denmark are not bound by the directive or subject to its application.
Key dates: