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EU's proposed new Market Abuse Rules are unveiled



United Kingdom

On 10 September 2013, the European Parliament formally endorsed the European Commission's proposal for a new regulation on insider dealing and market abuse.

Market reCap October 2013 edition 



On 10 September 2013, the European Parliament formally endorsed the European Commission's proposal for a new regulation on insider dealing and market abuse. The new regulation is intended to strengthen the existing framework of the Market Abuse Directive (2003/6/EC).

This article outlines the major developments in the new rules as they currently stand, though the rules are subject to alignment with proposed legislative amendments to the Markets in Financial Instruments Directive (known as "MiFID II") and other revisions.

The proposed rules

Under the draft new rules, the following significant proposals are mooted:

Changes in scope

  • the legislation will apply to financial instruments, interest rates, currencies, benchmarks, indexes and derivative instruments traded on regulated markets and those traded on trading platforms in at least one EU member state;

  • commodity derivatives affecting food and energy prices will also be included in the definition of financial instruments; and

  • the definition of market abuse will be expanded to cover transmitting false information and providing misleading inputs to the calculation of benchmark rates such as LIBOR.

New safe harbours

  • categories of behaviour that will not give rise to a presumption of insider dealing will now include the legitimate activities of market making and order execution;

  • subject to certain conditions, using inside information concerning a company obtained in the conduct of a takeover bid for the purpose of gaining control of that company will not, in itself, be deemed to constitute insider dealing; and

  • there will be a safe harbour for market soundings provided certain conditions are met.

Persons discharging managerial responsibilities ("PDMRs")

  • there will be new requirements for issuers to make insiders and PDMRs aware of their responsibilities under the market abuse regulation;

  • the financial threshold above which an obligation to disclose PDMR transactions will be triggered will be reduced to 5,000 Euros in a calendar year (subject to a power for competent authorities to increase the threshold to 20,000 Euros where justified by market circumstances);

  • there will be new provisions specifying the process for notifying PDMR transactions and the content of such notifications; and

  • subject to limited exceptions, a closed period for PDMR transactions is to be introduced in the thirty day period prior to the publication of interim financial reports or year-end reports under the rules of an issuer's trading venue or national law.

Other changes

  • rules will be adapted to new technology including high frequency trading;

  • the concept of accepted market practices (AMPs) in the context of market abuse is being reinstated;

  • there are new provisions relating to the content and maintenance of insider lists;

  • there will be a move towards a cross-border surveillance system; and

  • there is to be greater protection for whistleblowers.


  • there may be a disgorgement of profits gained or losses avoided;

  • a temporary or permanent ban on PDMRs holding certain jobs within investment firms may be imposed;

  • companies convicted of market abuse could be fined a maximum fine of at least 15 million Euros or 15 percent of their annual turnover; and

  • individual perpetrators could face fines of up to 5 million Euros.


The date of application of the new market abuse rules is to be aligned with that of MiFID II. Once adopted, the regulation would apply from 24 months after its entry into force.

Possible criminal sanctions are the subject of a separate but complementary process, and we understand negotiations between the European Parliament and the European Council on a political agreement may be concluded by the end of 2013.

We will continue to follow the developments on this front and provide further updates in future editions of Market reCap.


Shash Dayal is an Associate in the Corporate Group of Field Fisher Waterhouse LLP in London.

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