Insider Dealing and Market Manipulation (Market Abuse)

Regulations entitled the Market Abuse (Directive 2003/6/EC) Regulations 2005, (S.I. No. 342) came into effect on 6 July, 2005. These Regulations are intended to give effect to Directive 2003/6/EC of 28 January 2003 on insider dealing and market manipulation (market abuse) and the implementing Directives, 2003/124/EC, 2003/125/EC, 2004/72/EC.

The Directive is based on the principles of transparency and equal treatment of market participants. It aims to reinforce protection against insider dealing and market manipulation by building one set of rules for all the EU's financial markets, thus reducing potential inconsistencies, confusion and loopholes. It would heighten investor protection and make European financial markets more attractive. (Frequently asked questions)

The Ecofin Council of Ministers formally adopted the Directive on 3 December, 2002 (Press Release). The Directive covers both insider dealing and market manipulation. The same framework applies to both categories of market abuse. This will simplify administration and reduce the number of different rules and standards across the European Union.

The Directive is due to be implemented by Member States not later than 12 October, 2004.

On 7 January, 2004, the Commission adopted the following implementing measures in relation to the Market Abuse Directive (see Press Release). :

Commission Directive 2003/124/EC of 22.12.2003 implementing Directive 2003/6/EC of the European Parliament and of the Council as regards the definition and public disclosure of inside information and the definition of market manipulation

Commission Directive 2003/125/EC of 22 December 2003 implementing Directive 2003/6/EC of the European Parliament and of the Council as regards the fair presentation of investment recommendations and the disclosure of conflicts of interest

Commission Regulation (EC)2273/2003 of 22 December 2003 implementing Directive 2003/6/EC of the European Parliament and of the Council as regards exemptions for buy-back programmes and stabilisation of financial instruments

A further Commission Directive was adopted on 29 April 2004:

Commission Directive 2004/72/EC of 29 April 2004 implementing Directive 2003/6/EC of the European Parliament and of the Council as regards accepted market practices, the definition of inside information in relation to derivatives on commodities, the drawing up of lists of insiders, the notification of managers' transactions and the notification of suspicious transactions