On 12 June, Regulation No 596/2014 on market abuse (known as the Market Abuse Regulation or MAR) and Directive 2014/57/EU on criminal sanctions for market abuse (the Market Abuse Directive) were published in the EU Official Journal.
The Market Abuse Regulation will become operative on 3 July 2016 and Member States are required to implement the Directive on criminal sanctions for market abuse into national law by the same date, 3 July 2016.
The new legislative framework updates and strengthens the existing legislation on market integrity and investor protection provided by the existing Market Abuse Directive (2003/6/EC), which will be repealed. According to the European Commission, the Market Abuse Regulation is designed to ensure regulation keeps pace with market developments such as the growth of new trading platforms, over the counter (OTC) trading and new technology such as high frequency trading (HFT), strengthens the fight against market abuse across commodity and related derivative market. It explicitly bans the manipulation of benchmarks (such as LIBOR), reinforces the investigative and administrative sanctioning powers of regulators and ensures a single rulebook while reducing the administrative burdens on SME issuers.
The Directive on criminal sanctions for market abuse is designed to complement the Market Abuse Regulation by requiring all Member States to provide for harmonised criminal offences of insider dealing and market manipulation, and to impose maximum criminal penalties of not less than 4 and 2 years imprisonment for the most serious market abuse offences. Member States will have to ensure that such behaviour, including the manipulation of benchmarks, is a criminal offence, punishable with effective sanctions across Europe.