The European Parliament has adopted, with some amendments, the proposed market abuse directive on criminal sanctions for market abuse and insider dealing. The following are some of the key features of the updated text of the directive:

  • The scope of the directive is extended to capture market abuse occurring across both commodity and related derivative markets, and includes financial instruments admitted to trading on a "regulated market" (in Ireland this is the Main Securities Market) and Multilateral Trading Facilities (MFTs) as well as those which are traded on an Organised Trading Facility (OFT);
  • This is a minimum harmonisation directive with Member States being required to introduce common minimum rules for serious cases of market abuse to facilitate the co-operation of law enforcement across the European Union. Member States may impose more stringent measures;
  • Significant criminal penalties are set out in the text of the directive, including the imposition of prison terms for more serious offences. Courts will be required to impose four year terms for more serious offences of insider dealing and market manipulation, and two year terms for unlawful disclosure of information; and
  • The directive contains common definitions for offences and the penalties applied to them. Market manipulation offences carry a four year imprisonment term and include entering into a transaction or placing an order which gives false or misleading signals about the supply, demand or price of one or more financial instruments. Insider dealing offences, which also carry a four year imprisonment term include those in which inside information is used with intent to buy or sell financial instruments or to cancel or amend an order.

Next steps: After publication of the directive in the Official Journal, which is expected in June 2014, Member States will have two years to implement the directive in national law.