European Union Overhauls Insider Dealing and Market Abuse Regime

On June 12, 2014, the Market Abuse Regulation and the Directive on Criminal Sanctions for Market Abuse, together known as MAD II, were published in their final and official version. MAD II will replace the existing market abuse directive in July 2016.

Like its predecessor, MAD II prohibits market abuse on EU regulated markets. Market abuse encompasses trading in financial instruments on the basis of inside information, the improper disclosure of inside information and the manipulation of market prices through practices such as the dissemination of rumours or the conducting of certain trades in related instruments.

MAD II will (i) broaden the scope of the market abuse rules to capture new markets, notably the spot commodities markets and multilateral trading facilities; (ii) update the market abuse regime to reflect recent market developments, such as emission allowances trading and high-frequency trading; (iii) harmonize the application of market abuse rules, exemptions and sanctions across the EU; and (iv) strengthen administrative sanctions for market abuse and introducing criminal sanctions for the first time.