On 20 October, the Commission issued a proposal for a new Market Abuse Regulation (MAR) to replace the Market Abuse Directive 2003/6. The proposal retains the prohibitions on insider trading and market manipulation. The proposal is intended to reflect developments in financial markets over the past 10 years or so, and to strengthen enforcement. Key changes include:
- extending the scope of the prohibitions to cover financial instruments traded on multilateral trading facilities (MTFs), other organised trading facilities (OTFs) and over the counter (OTC);
- making it clear that market abuse occurring across both commodity and related derivative markets is prohibited;
- reinforcing cooperation between financial and commodity regulators;
- providing more effective powers of investigation, including powers to access phone and data records, powers to investigate private documents or at private premises (subject to the additional safeguard of obtaining a warrant from the national courts; and
- providing for deterrent penalties at least equal to the profit obtained from the market abuse, and up to twice the profit.
At the same time as publishing the proposed MAR, the Commission issued a proposed Directive requiring Member States to introduce criminal penalties for breach.
The proposed MAR is a useful update and reinforcement of existing rules, although it is disappointing that the Commission has (perhaps intentionally) not taken the opportunity to address some of the specific concerns that have arisen in the enforcement of the MAD over the past few years, such as the judgment of the ECJ in Case C-45/08 Spector Photo Group NV v. CBFA. In that case, the ECJ held that a person who trades in a financial instrument in respect of which he has inside information is to be considered as having "used" that inside information, unless he is able to prove otherwise.
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