On December 27 2016, following the adoption of Bill of Law 7022, the new Act on Market Abuse of December 23 2016 entered into force. As a result, the Act on Market Abuse of May 9 2006 has been repealed.

Background

The new Act on Market Abuse was enacted following the recent changes to the EU market abuse legal framework, which was amended in its entirety in 2014.

The new act transposes the EU Criminal Penalties for Market Abuse Directive (2014/57/EU) and the EU Commission Implementing Directive of December 17 2015 on the Market Abuse Regulation (2015/2392/EU) into national law with regard to reporting actual or potential infringements of the regulation to the competent authorities.

In addition to the implementation of the EU Criminal Penalties for Market Abuse Directive, the new Act on Market Abuse also effectively implements the EU Market Abuse Regulation (596/2014), which was – subject to certain local implementing measures – directly applicable to all EU member states as of July 3 2016.

Key changes

The new Act on Market Abuse made the following key changes.

Alignment of act with extended scope of EU Market Abuse Regulation The EU Market Abuse Regulation has an extended scope, covering new:

  • financial instruments;
  • trading venues; and
  • prohibited behaviours.

In addition to financial instruments traded on regulated markets, financial instruments traded on multilateral trading facilities and organised trading facilities (OTFs) are now captured (with regard to OTFs, this will take effect on January 3 2018). Similarly, spot commodity contracts and (as of January 3 2018) emissions allowances and auctions products based thereon fall under the regulation's scope.

Increased penalties and extension of CSSF's powers The new Act on Market Abuse significantly increases the administrative and criminal penalties for infringements of market abuse provisions. Inciting or facilitating a breach of the new act is also subject to potential criminal penalties. Attempts to commit a breach of the new act are also prohibited. Legal and natural persons may be subject to criminal penalties.

The new act designates the Luxembourg financial sector regulator (CSSF) as the competent authority for the purposes of the EU Market Abuse Regulation. Additional supervisory and investigatory powers have been allocated to the CSSF to enable it to fulfil its duties under the regulation. In addition, and to the extent that criminal and administrative penalties may be imposed, the CSSF may liaise with the state prosecutor (empowered to open criminal proceedings) to ensure that the most adequate penalty (administrative or criminal) is imposed.

Reporting of suspicious transactions The new Act on Market Abuse implements into national law the EU Market Abuse Regulation's reporting of infringement provisions, as provided for in the EU Commission Implementing Directive on the Market Abuse Regulation. An annex to the new act sets out a detailed list of:

  • the means and processes to report suspicious transactions; and
  • the protective measures available for reporting persons.

Reporting may be done:

  • electronically;
  • orally (by telephone);
  • in writing; or
  • in person (with a CSSF agent).

Amendment of transparency act The new Act on Market Abuse extends the definition of 'regulated information' provided for in the Act on Transparency Requirements for Issuers of January 11 2008, as amended, by capturing the notifications which an issuer (or any other person which has applied for the admission of securities to trading on a regulated market without the issuer's consent) must make under the EU Market Abuse Regulation. Notification includes transactions conducted by persons discharging managerial responsibilities and persons closely associated with them.

For further information on this topic please contact Josée Weydert, Arnaud Joseph or Diana Konrad at NautaDutilh Avocats Luxembourg Sàrl by telephone (+352 26 12 29 1) or email (josee.weydert@nautadutilh.com, arnaud.joseph@nautadutilh.com or diana.konrad@nautadutilh.com). The NautaDutilh Avocats Luxembourg Sàrl website can be accessed at www.nautadutilh.com.

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