EU Directive no. 2003/6/EC (Market Abuse Directive) aims at guaranteeing the integrity of the European financial markets and at enhancing investors’ trust in the markets, by preventing the “disclosure of inside information” as well as “market manipulation”. The directive applies to any instrument admitted to trading on a regulated market or for which a request for admission to trading has been made, regardless of whether it is actually traded on that market or not.
In May 2005, the Committee of European Securities Regulators (CESR) published its level 3 guidelines, aimed at favoring implementation of the Market Abuse Directive and specifically regarding the so-called accepted market practices, detecting market manipulation practices as well as the so-called common reporting format, for reporting suspicious market manipulation transactions.
To ensure a consistent implementation of the MAD Directive in Member States, CESR launched another consultation phase in 2008, aimed at defining level 3 guidelines with respect to Market Abuse. It is divided into two specific papers; the first one, published in May, regards the following issues: the maintenance of insider lists by issuers, i.e. lists of people who may have access to inside information, and the obligation imposed on financial intermediaries to report suspicious transactions to the competent authorities. The second paper, published in October, addresses stabilization and buy-back as well as the definition of inside information.
ABI’s Position
ABI confirms its position, expressed during the various consultations that occurred during the Directive’s approval procedure and its related implementing measures; although we agree with the Directive’s goals, we believe it should not limit the banking industry’s freedom to operate.
Although ABI broadly agreed with the guidelines issued in 2005, during the consultation period, it informed CESR of the fact that, for what concerns the examples of manipulation practices provided, certain practices should be considered legitimate, as they are an integral part of widespread practices that are not damaging to market integrity. Moreover, for what regards possible signs of suspicious transactions, in certain cases the operating reasons behind such conduct are not duly considered.
In ABI’s response to CESR’s paper issued in May 2008, we informed the Committee that we agree with the fact that both the obligation to maintain insider lists and that to report suspicious transactions have raised market awareness of market abuse prevention. Since, in our opinion, this is due to the fact that the practices and procedures implemented by the banking industry, in accordance with the implementation of MAD in Member States, are properly functioning, we requested the least possible intervention by CESR in the market.
With regard to the CESR’s second consultation on the definition of Level 3 guidelines on the Market Abuse Directive with reference to stabilisation activities and buy back programmes, ABI does not fully agree with the view proposed on stabilization activity and asked for a broader interpretation of the market abuse exemptions, in order to cover not only the purchases but also the sales of securities. Furthermore, ABI asked CESR to leave the possibility to intermediaries to use more channels to disseminate to the market information on the stabilisation activity as provided by Market Abuse Directive.
• Response to the CESR on Market Abuse Level 3 – Third set of CESR guidance and information on common operation of the Directive to the market (9 January 2009) Full text >>