European Parliament’s endorsement of the political agreement on Market Abuse Regulation

11 Sep 2013 12:10 PM

In recent years financial markets have become increasingly global, giving rise to new trading platforms and technologies. This unfortunately has also led to new possibilities to manipulate these markets. The European Parliament voted today to formally endorse the political agreement on a Regulation on insider dealing and market manipulation (i.e. market abuse) to tackle market abuse more effectively, subject to alignment with the final political agreement on MiFID II and revisions by legal linguists and revisers.

This Regulation updates and strengthens the existing framework to ensure market integrity and investor protection provided by the Market Abuse Directive (2003/6/EC). The new framework will ensure regulation keeps pace with market developments, it will strengthen the fight against market abuse across commodity and related derivative markets, explicitly ban the manipulation of benchmarks, such as LIBOR, and reinforce the investigative and sanctioning powers of regulators.

EU rules will be adapted to the new market reality, notably by extending their scope to include all financial instruments which are traded on organised platforms and over the counter (OTC), and adapting rules to new technology. The manipulation of benchmarks such as LIBOR will be explicitly prohibited, market abuse occurring across both commodity and related derivative markets will be prohibited, and cooperation between financial and commodity regulators is reinforced. Supervisors will have access to the information they need to detect and sanction market abuse. Since the sanctions currently available to supervisors often lack a deterrent effect, sanctions will be tougher and more harmonised. Possible criminal sanctions are the subject of a separate but complementary proposal on which it is hoped that negotiations between the European Parliament and the Council on a political agreement could conclude by the end of this year (see also IP/11/1218).

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