In response to the economic crisis and recent scandals involving financial institutions, the European Commission has proposed to update and strengthen the EU’s legislative framework against market abuse.
The Commission’s proposals include the replacement of the 2003 Market Abuse Directive with a Regulation on Insider Dealing and Market Manipulation. This Regulation would broaden the scope, review definitions of insider dealing and market manipulation, clarify procedures for handling of inside information, and widen the responsibilities of national authorities.
The Commission has also proposed a Directive on criminal sanctions for insider dealing and market manipulation, seeking to establish a criminal-law regime for market abuse. The Directive treats certain forms of insider dealing as criminal offences and Member States would be required to sanction them as such, with minimum sanctions determined at EU level.
Whilst there is widespread agreement that this criminalisation is justified, its efficiency is still under debate. Critics of the proposals say the burden of proof required is high, and market complexity poses a challenge for regulators. There have also been calls for a more drastic solution such as the separation of commercial and investment banks.
