The European Union is planning to toughen its rules on insider dealing and wider market abuse in an effort to plug gaps in the way its current directive on the issue is enforced.
The trading bloc agreed a directive in 2003 that was meant to usher in a common approach to market abuse among its 27 member states. But the European Commission – the EU’s executive arm – says the directive needs to be overhauled.
The financial crisis has highlighted gaps in the way some markets and financial instruments are regulated, the Commission says, and shown that “the effectiveness of enforcement has been uneven.”
It added: “While the financial crisis does not seem to have resulted in increased volume of market abuse in the EU, it has highlighted how markets react quickly to price sensitive information and how much this affects investor confidence in markets.”
The Commission says it wants to see new requirements to report suspicious transactions, “significantly enhanced” investigative powers for national regulators, tougher sanctions to deter wrongdoers and greater cooperation between enforcement authorities – both within Europe and abroad.
It ideas are set out in a consultation paper, “Public Consultation on a Revision of the Market Abuse Directive.” The new directive should be in place early next year, the Commission said.
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