The 7 Deadly Sins of Market Abuse

By PlanetCompliance

The book provides an introduction to the Market Abuse Regime, outlining the offenses under current regulation together with relevant case law. It also gives an outlook as to the forthcoming changes that will be introduced by the Market Abuse Regulation of the European Union. For more information on the book and other regulatory topics visit PlanetCompliance.com

• Language: English
• Publisher: PlanetCompliance
• Release date: May 8, 2016
• ISBN: 9781310221767

PlanetCompliance

PlanetCompliance is a platform that provides news and resources to anyone who works in the financial industry or has an interest in regulation and compliance.

Book preview

The 7 deadly sins of Market Abuse

- An introduction to the Market Abuse Regime -

© 2016 PlanetCompliance.com

Table of Contents

Foreword

Prolog: What is Market Abuse

Insider Dealing

Improper Disclosure

Misuse of Information

Manipulating Transactions

Manipulating Devices

Dissemination

Distortion and Misleading Behaviour

More Case Law

Outlook

About PlanetCompliance

Foreword

This book has been first written three years ago when the upcoming Market Abuse Regulation had not been drafted yet and the European Parliament only had endorsed the political agreement on new European rules for Market Abuse. How time flies! So one could think that in the fast moving world of regulation (which might be a bit of an overstatement given how long it actually takes from the beginning of a regulatory initiative to its implementation) the content of this book might be out-dated and no longer relevant, but we beg to differ: MAR will extend the scope of the existing Market Abuse framework to new markets, new platforms and new behaviours to deal with regulatory challenges that have materialised over the last couple of years such as benchmark manipulation and algorithmic trading; the underlying principles remain the same though. Furthermore, we believe it can’t hurt to have a good understanding of the historical development of legislation.

We will, of course, aim to produce an updated version in due course, but in the meantime, we hope you find this book helpful and enjoy reading it.

If you have any thoughts or comments on this book, we are always grateful for feedback, so visit us and leave a note at:

PlanetCompliance.com

Spring 2016

Prolog: What is Market Abuse?

What is Market Abuse? Everyone seems to have an idea of what it is supposed to be, but what does it really mean? Well, it depends. It depends on the jurisdiction, since most jurisdictions globally consider it generally illegal, but rules vary from country to country. But before this creates even more confusion, we will give an overview on Market Abuse and its different forms (always with a view to the UK regime though). The next chapters will then try to explain in more detail its various aspects.

Definition

In its recent Market Abuse Regulation (MAR), the European Union defines market abuse as a concept that encompasses unlawful behaviour in the financial markets. With regard to MAR, the legislator elaborates further that it should be understood to consist of insider dealing, unlawful disclosure of inside information and market manipulation. Such behaviour prevents full and proper market transparency, which is a prerequisite for trading for all economic actors in integrated financial markets.

The EU has set with its previous Market Abuse legislation in 2005 and the current set of new rules in the form of the second Market Abuse Directive and the Market Abuse Regulation a framework for a EU-wide Market Abuse regime. The new rules will apply from 3 July 2016. However, as said above though, legislation varies from country to country, and despite this general framework, this also applies within the EU. Why? On one hand, because of differences in the implementation of EU directives as, for example, the UK regulator had chosen to go beyond the minimum standards of the first Market Abuse Directive and continue with a stricter set of rules; on the other hand, because some countries like the UK have chosen to opt out of the second Market