ABBL
Association des Banques et Banquiers, Luxembourg
The Luxembourg Bankers' Association
Luxemburger Bankenvereinigung
En 2003 la directive abus des marchés, pionnière de la nouvelle procédure « Lamfalussy », a été présentée comme l’une des actions principales du Plan d’Action des Services Financiers (PASF) afin d’assurer l’intégrité des marchés financiers au sein de l’Union européenne.
Le but de cette directive était de garantir des mesures de dissuasion et des sanctions appropriées pour lutter contre certains comportements illicites tels les délits d’initiés et manipulations de marché.
La mise en place d’un nouveau cadre juridique était une priorité absolue dans la mesure où il n’existait quasi pas de normes communes pour contrecarrer les manipulations de marché si ce n’est que la Directive concernant les opérations d'initiés (89/592/CEE).
Le 28 juin 2010, la Commission européenne a lancé une consultation sur le réexamen de la directive sur les abus de marché.
Le 20 octobre 2011 la Commission européenne a adopté une proposition de règlement sur les opérations d'initiés et les manipulations de marché. Comme prévu et basé sur les consultations antérieures, la proposition élargit le champ d'application des instruments financiers et leurs plateformes de négociation.
Seront règlementés outre les instruments classiques tel les obligations et actions, les marchés dérivés, les matières premières et les instruments dérivés qui y sont liés ainsi que certificats d’émission.
Les deux éléments majeurs étant :
- la division en deux instruments juridiques, à savoir, une directive et une réglementation,
- une harmonisation plus poussée et renforcée des sanctions prévues en cas d’abus de marché.
Un troisième point d’intérêt concerne le régime des petites et moyennes entreprises : les obligations en matière de communication d'informations pour les émetteurs opérant sur les marchés des PME seront adaptées aux besoins desdits émetteurs.
Par ailleurs, la proposition de règlement considère non seulement l'acte en soi, mais déjà l'intention de manipuler le marché comme abus de marché. Elle précise en outre les stratégies de trading à haute fréquence qui constituent des manipulations de marché interdites.
Transposée en droit luxembourgeois par la loi du 9 mai 2006 relative aux abus de marché la directive ne répond plus vraiment aux spécificités des marchés financiers d’aujourd’hui.
Son réexamen est un élément clé de la stratégie de la Commission européenne en faveur d’un renforcement du cadre règlementaire pour les services financiers visant à réduire la charge administrative qui pèse sur les entreprises de l’Union européenne de 25% d’ici à 2012.
Background
Adopted in early 2003, the Market Abuse Directive (MAD) has introduced a comprehensive framework to tackle insider dealing and market manipulation practices, jointly referred to as "market abuse". The Directive aims to increase investor confidence and market integrity by prohibiting those who possess inside information from trading in related financial instruments ("insider trading"), and by prohibiting the manipulation of markets through practices such as spreading false information or rumours and conducting trades that result in abnormal prices. ("market manipulation").
In essence, market abuse may occur when investors have been unreasonably disadvantaged, directly or indirectly, by others who:
- have used information that is not publicly available to trade in financial instruments to their advantage (insider dealing);
- have distorted the price-setting mechanism of financial instruments; or
- have disseminated false or misleading information.
The MAD creates some tools to prevent and detect market abuses, like insiders' lists, suspicious transaction reports and the disclosure of managers' share transactions. It also obliges issuers of financial instruments traded on a regulated market to make public as soon as possible inside information that they possess, with limited possibilities to delay.
In order to promote enforcement, the Directive gives national competent authorities powers of investigation (such as access to data or on-site inspections) and the power to take administrative measures or impose "effective, proportionate and dissuasive" sanctions.
MEMO/11/715 - 20 October 2011 - European Commission
Why is the MAD being reviewed?
The MAD introduced a framework to harmonise core concepts and rules on market abuse and strengthen cooperation between regulators. However, a number of problems have been identified by the Commission and these can be broadly categorised in five groups:
- gaps in regulation of new markets, platforms and over-the-counter (OTC) trading in financial instruments
- gaps in regulation of commodities and commodity derivatives
- regulators cannot effectively enforce the MAD
- lack of legal certainty undermines the effectiveness of the MAD, and administrative burdens, especially for small and medium-sized companies (SMEs).
This is why the Commission has adopted proposals to replace the MAD with a Regulation on Market Abuse (MAR) and a Directive on criminal sanctions for market abuse. Proposal for a Market Abuse Regulation (MAR.
MEMO/11/715 - 20 October 2011 - European Commission
What are the main objectives of the proposal for a Regulation?
The proposal for a Regulation aims to update and strengthen the existing framework to ensure market integrity and investor protection provided by the Market Abuse Directive. The new framework will ensure regulation keeps pace with market developments, strengthens the fight against market abuse across commodity and related derivative markets, reinforces the investigative and administrative sanctioning powers of regulators and harmonises certain key elements while reducing administrative burdens on SME issuers where possible.
MEMO/11/715 - 20 October 2011 - European Commission
How do the MAR proposals fit in with the MiFID review proposals, and other recent initiatives such as those on OTC derivatives?
Together, MAD and MiFID guarantee the competitiveness, efficiency and integrity of EU financial markets. They need to be updated in tandem to ensure that they are fully coherent and support each other's objectives and principles. Moreover, the pan-EU competition facilitated by MiFID has given rise to new challenges in terms of cross-border supervision. Harmonisation of the rules and competent authorities' powers is a necessary step.
The importance of market integrity has also been highlighted by the current global economic and financial crisis. In this context, the Group of Twenty (G20) agreed to strengthen financial supervision and regulation and to build a framework of internationally agreed high standards. In line with the G20 findings, the report by the High-Level Group on Financial Supervision in the EU recommended that "a sound prudential and conduct of business framework for the financial sector must rest on strong supervisory and sanctioning regimes".
The importance of the efficient functioning of the MAD was underlined in the Commission Communication "Driving European recovery", which intends to tackle the most important shortcomings in the markets that have been observed in the current financial crisis. In its Communication on "Ensuring efficient, safe and sound derivatives markets: Future policy actions", the Commission said it would extend MAD’s relevant provisions to comprehensively cover derivatives markets.
The importance of efficient coverage of OTC transactions in derivatives has been stressed also in discussions at various international fora including the G20 and the International Organisation of Securities Commissions as well as in the recent US Treasury Financial Regulatory Reform programme.
MEMO/11/715 - 20 October 2011 - European Commission
What changes does the proposal make so that market abuse legislation keeps pace with market developments?
The MAD is based on the concept of prohibiting insider dealing or market manipulation in financial instruments which are admitted to trading on a regulated market. However, since the adoption of MiFID, financial instruments have been increasingly traded on multilateral trading facilities (MTFs), on other types of organised trading facilities (OTFs), such as swap execution facilities or broker crossing systems, or only traded OTC.
These new trading venues and facilities have provided more competition to existing regulated markets, gaining an increased share of liquidity and attracting a broader ranger of investors. But the increase in trading across different venues has made it more difficult to monitor for possible market abuse.
Therefore the proposal extends the scope of the market abuse framework to apply to any financial instrument admitted to trading on an MTF or organised trading facility, as well as to any related financial instruments traded OTC which can have an effect on the covered underlying market.
This is necessary to avoid any regulatory arbitrage among trading venues, to ensure that the protection of investors and the integrity of markets are preserved on a level playing field in the whole Union, and to ensure that market manipulation of such financial instruments through derivatives traded OTC, such as credit default swaps (CDS), is clearly prohibited.
MEMO/11/715 - 20 October 2011 - European Commission
How does the proposal deal with emission allowances?
Emission allowances are reclassified as financial instruments as part of the proposal for a regulation on markets in financial instruments (see MEMO/11/716). As a result, they will also fall into the scope of the market abuse framework.
As it is typically not the issuer of an emission allowance who possesses inside information, the standard definition of inside information does not sufficiently ensure disclosure of relevant inside information. Therefore, a specific definition of inside information for emission allowances is introduced.
The obligation to disclose inside information will be effectively placed on companies with large installations regulated by the EU Emissions Trading System, as it is they who possess the relevant information. For more information on emission allowances, see also MEMO/11/719).
MEMO/11/715 - 20 October 2011 - European Commission
How does the proposal reinforce the powers of competent authorities to detect market abuse?
The proposal includes a number of measures to ensure regulators have access to the information they need to detect and sanction market abuse. The proposal extends suspicious transaction reporting to orders and to OTC transactions.
It clarifies that regulators can obtain existing telephone and data traffic records from telecoms operators where there is a reasonable suspicion of insider dealing or market manipulation (as defined in the proposal for a Directive) in violation of the Regulation or the Directive. It also grants competent authorities access to private documents or premises where there is a reasonable suspicion of insider dealing or market manipulation (as defined in the Directive) in violation of the Regulation or the Directive, subject to a judicial warrant.
It also requires Member States to provide for the protection of whistleblowers and sets common rules where incentives are provided to them for reporting information about market abuse. Finally a new offence of "attempted market manipulation" is introduced to make it possible for regulators to impose a sanction in cases where someone tries to manipulate the market but does not succeed in actually trading.
MEMO/11/715 - 20 October 2011 - European Commission
How does the proposal strengthen the administrative sanctions that can be imposed for market abuse?
Since the sanctions currently available to regulators are often weak and lacking a deterrent effect, the proposal introduces greater harmonisation of administrative sanctions. Common principles are proposed, notably that fines should not be less than the profit made from market abuse where this can be determined, and the maximum fine should not be less than two times any such profit.
For natural persons, the maximum fine should not be less than €5 million, and for legal persons it should not be less than 10% of annual turnover, with Member States being free to exceed these limits. In imposing sanctions, competent authorities should take account of other aggravating or mitigating factors, such as the gravity of the offence, previous offences or a suspect's cooperation with an investigation.
In parallel, a proposal for a Directive on criminal sanctions for market abuse requires Member States to introduce criminal sanctions for the offences of insider dealing and market manipulation as defined in the Directive, where these are committed intentionally.
MEMO/11/715 - 20 October 2011 - European Commission
What does the proposal do to reduce administrative burdens, especially on SME issuers?
Insiders' lists are an important tool for competent authorities when investigating possible market abuse. However, differences in national laws implementing the MAD have imposed unnecessary administrative burdens on issuers. The Regulation aims to eliminate these by providing that the precise data to be included in such lists should be defined in delegated acts and implementing technical standards adopted by the Commission.
Applying the new market abuse framework of the Regulation in an undifferentiated manner to all SME growth markets may deter issuers on those markets from raising capital on the capital markets. Without prejudice to the objectives of preserving the integrity and transparency of financial markets and of protecting investors, the proposal therefore adapts the market abuse framework to the characteristics and needs of issuers whose financial instruments are admitted to trading on SME growth markets. The scope and size of the business of those issuers is more restricted and the events giving rise to the need to disclose inside information are typically more limited than those of larger issuers. The Regulation therefore requires those issuers to disclose inside information in a modified and simplified market-specific way. Such inside information may be published by those SME growth markets, on behalf of those issuers, in accordance with a standardised content and format defined in implementing technical standards adopted by the Commission. Those issuers are also exempt, under certain conditions, from the obligation to keep and constantly update insiders' lists.
The Regulation clarifies the scope of the reporting obligations in relation to managers' transactions. These reports serve important purposes by deterring managers from insider trading and providing useful information to the market about the manager's view on the price movements of the shares of the issuers. The Regulation clarifies that any transaction made by a person exercising discretion on behalf of a manager of an issuer or whereby the manager pledges or lends his shares must also be reported to the competent authorities and be made accessible to the public. Moreover, it introduces a threshold of €20 000, uniform in all Member States, which triggers the obligation to report such manager's transactions. This higher threshold will contribute also to reducing the administrative burden on SMEs.
MEMO/11/715 - 20 October 2011 - European Commission
What are the next steps in the adoption of the proposal for a Regulation?
The proposal now passes to the European Parliament and the Council for negotiation and adoption. Once adopted the regulation would apply from 24 months after its entry into force.
MEMO/11/715 - 20 October 2011 - European Commission
Articles
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20/10/2011
The European Commission adopted on 20 October 2011 a proposal for a Regulation on insider dealing and market manipulation. The proposal aims to update and strengthen the existing framework to ensure market integrity and investor protection provided by the Market Abuse Directive. The new framework will ensure regulation keeps pace with market developments, will strengthen the fight against market abuse across commodity and related derivative markets, reinforce the investigative and sanctioning powers of regulators and reduce administrative burdens on small and medium-sized issuers.
More On
- Loi du 26 juillet 2010 relative aux abus de marché
- Loi du 9 mai 2006 relative aux abus de marché et portant transposition de la directive 2003/6/CE
- Directive 2003/6/CE du Parlement européen et du Conseil du 28 janvier 2003 sur les opérations d'initiés et les manipulations de marché (abus de marché)
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