Insider trading and market manipulation
Draft EU legislation to discourage insider trading and market manipulation was discussed in the Economic and Monetary Affairs Committee this week.
MEPs focused on how best to define "insider information", ensure proper surveillance, encourage whistle blowers and punish offenders.
The draft market abuse directive is designed to:
* tackle shortcomings observed in the markets during the financial crisis. It would impose EU-wide criminal and administrative penalties for insider trading and market manipulation; and
* harmonise Member States' existing rules and at the same time update them to suit new trading venues and financial instruments and keep pace with technological progress.
MEPs welcomed plans proposed in the directive to harmonise sanctions, but stressed that to make them effective, accurate definitions are needed, e.g. of "relevant insider information". Arlene McCarthy, rapporteur on both the market abuse directive and regulation, added that both kinds of sanctions, administrative and criminal, should remain in use.
MEPs shared Ms McCarthy's view that cross-border surveillance must be strengthened in order to capture orders placed and executed in markets of several Member States by multiple parties buying and selling financial instruments.
Ms McCarthy's draft report is to be tabled on 26th March. The committee vote will follow in July.