Published on 20 Oct 2011 • European Union |
"The new market abuse proposals will give European regulators a stronger toolkit to tackle market abuse.
The scope of the regime is significantly expanded to bring within the market abuse regime modern market developments such as financial instruments admitted to trade on multilateral trading facilities (MTFs) and other organised trading facilities (OTFs), as well as any financial instruments traded over-the-counter (OTC) which can have an effect on the covered underlying market. The market abuse regime applying to commodities trading will be made more consistent with the rest of the regime. There will also be a clampdown on abuse resulting from automated trading methods, such as algorithmic and high frequency trading (HFT) strategies, where those strategies are illegitimate.
Attempted market manipulation, where a person intends to manipulate the market but does not place an order or execute a transaction, is also brought within the net. There are also measures to strengthen investigations such as the powers to enter private premises, seize documents and access telephone records.
The proposals also envisage a more uniform set of criminal and administrative sanctions, and it is particularly interesting that fines on corporates will be based on a proportion of annual turnover, which is more in line with a competition law type approach to sanctions.
As a result of the FSA's increasingly tough approach to tackling market abuse, the UK is generally 'ahead of the game' in many of these areas (for example the increasing number of criminal prosecutions), and many market users will welcome a more level playing field across the EU to reduce regulatory arbitrage."
"Criminal sanctions demonstrate social disapproval of a qualitatively different nature compared to administrative sanctions or compensation mechanisms under civil law. Common minimum rules on the definition of criminal offences for the most serious market abuse offences would also facilitate the cooperation of law enforcement and judicial authorities in the Union, especially considering that the offences are in many cases committed across borders."
"The new market abuse proposals will give European regulators a stronger toolkit to tackle market abuse.
The scope of the regime is significantly expanded to bring within the market abuse regime modern market developments such as financial instruments admitted to trade on MTFs and OTFs, as well as any financial instruments traded OTC which can have an effect on the covered underlying market. The market abuse regime applying to commodities trading will be made more consistent with the rest of the regime. There will also be a clampdown on abuse resulting from automated trading methods, such as algorithmic and high frequency trading strategies, where those strategies are illegitimate.
Attempted market manipulation, where a person intends to manipulate the market but does not place an order or execute a transaction, is also brought within the net. There are also measures to strengthen investigations such as the powers to enter private premises, seize documents and access telephone records.
The proposals also envisage a more uniform set of criminal and administrative sanctions, and it is particularly interesting that fines on corporates will be based on a proportion of annual turnover, which is more in line with a competition law type approach to sanctions.
As a result of the FSA's increasingly tough approach to tackling market abuse, the UK is generally 'ahead of the game' in many of these areas (for example the increasing number of criminal prosecutions), and many market users will welcome a more level playing field across the EU to reduce regulatory arbitrage."