The Markets Abuse Directive II proposals

Source: Katarina Krempova¸ PKF Malta¸ 10 January 2012

This proposal is a revision of MAD I which came into effect in early 2003. This directive introduced a comprehensive framework to tackle insider dealing and market manipulation practices (“market abuse”) in order to increase investor confidence and market integrity. According to the Directive¸ Member States are required to ensure the appropriate administrative measure or administrative sanctions against the responsible persons.

But the previous rules adopted by MAD I didn’t achieve the desired effect¸ i.e. contributing effectively to the protection of the financial markets. The key problem is that not all Member states have provided criminal sanctions for some forms of serious breaches. In order to enforce legislative framework there has been the need of some revisions of current system. 

Following the proposal¸ it is therefore essential to ensure introduction of criminal sanctions for the most serious market abuse offences by all Member states.

The MAD II proposal is primarily aimed at:

  • ensuring the effective implementation of EU policies through criminal law;
  • Compliance-strengthening by the availability of criminal sanctions which demonstrate a social disapproval of a qualitatively different nature compared to administrative penalties.

This Directive sets out only minimum rules and Member States are free to adopt or maintain more stringent criminal law rules for market abuse.

To read whole proposal click here

Source: European Commission