Preventive methodologies to fight market abuses
One of the actions that the European Union legislative bodies took, to increase the confidence of investors in the market, is to enhance the efforts for harmonisation and clearer rules for market abuse. Insider dealing is one type of unlawful action that can be used to manipulate the market. The Directive 2014/57/EU strengthened and replaced the former Market Abuse Directive.
The provisions for insider dealing apply, among others, to the following:
- financial instruments that trade on regulated markets,
- financial instruments traded on a multilateral trading facility (hereafter "MTF")
- financial instruments traded on an organised trading facility (hereafter "OTF")
- financial instruments which price/value depends on the price/value of one of the above instruments.
The above financial instruments should comply with the provisions of insider dealing and non-compliance with these rules constitutes a criminal offence. Even the attempted insider dealing is a criminal offence according to the Directive.
The aim of the EU legislation on this subject is to ensure that all the market players have access to the same facts, the same data. In this way, the EU ensures transparency and fair markets. To this direction, the Market Abuse Regulation 596/2014, (hereafter “MAR”) was published emphasising administrative sanctions and member states' authorities investigative powers. For example, the relevant authorities have the right to access the premises of suspicious people or entities to obtain documents or other material like recordings of telephone conversations or emails.
EU legislation is continuously amended to protect the markets from another crisis and to promote further financial evolvement in the EU. The legal framework becomes more strict and detailed. Pideeco is here to offer you consulting services and keep your business compliant and up-to-date with the relevant rules and obligations.
Compliance risk is one of the biggest concerns of the banking industry. Failing to comply can impact on the reputation of the brand and create a decrease in its customer population. Lack of due diligence in transactions and clients monitoring can drag the bank to costly...Read more Author What else ?