General Overview. EU Market Abuse Regime

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2 General Overview EU Market Abuse Regime 2

3 Do these names say something to you? 3

4 Demand excessive demand drives the price upwards Supply excess of supply leads to a decrease of the price 4

5 Correct interplay Every investment that leads to certain between demand and decision is based on the expectations on the future supply is vital for an efficient market analysis of the available information business performance of an issuer 5

6 The more information an investor has The more his/her analysis can be accurate The better his/her investment decisions can be 6

7 Possibility that an investor tries to gain an unfair advantage by using certain practices (or exploiting his/her position) to materialize unjust financial market gains Insider Dealing Use of non-public information about an issuer for the purposes of making investment decisions Market manipulation Practices ces aimed at creating a false impression about the actual worth of a listed security 7

8 Insider dealing allows some investors (the insiders ) to gain unjust advantages from exploiting their own price-sensitive, non-public (or not yet public) information relating to a listed issuer Insiders may be corporate officers, directors, or outside persons associated with them or with the issuer The insiders must be in possession of information, the publication of which would alter the public investors view of the issuer, driving up or down the price of its securities 8

9 Insiders may profiteer from their position, to the detriment to the other investors by: Trading in the issuer listed securities (directly or through proxies) on the basis of the same information Privately disclosing the same information to third parties for trading purposes ( tipping ) 9

10 Market manipulation consists in behaviours like misrepresentations, false statements, concealments, artificial transactions, and trading schemes The aim is to induce the investors to engage in trading (or exercising rights) with reference to listed securities Securities prices are therefore led to an artificial level, allowing the perpetrators p to materialize financial gains not obtainable otherwise 10

11 Market manipulation can be implemented by anybody, not necessarily the insiders, to the detriment to the investor s confidence in the market, through: The malicious dissemination of false or misleading information and news, through any means, with reference to certain securities and/or the market as a whole Transactions which give false signals as to the securities demand, supply or price Fictitious transactions that set an artificial price of securities 11

12 EC Directive no. 6/2003 Second-level measures - EC Directives no. 124 and 125/2003, Reg. 2273/2003 National provisions of law National regulatory provisions 12

13 Same access to information Level playing field Efficient market in which the prices reflect the actual value of the securities and only each investor s ability makes the difference 13

14 Prohibition of insider dealing 14

15 Measures against insider dealing: Restrictions on the insiders in respect of the trading of the issuer s securities Disclosure duties on the insiders with respect to transactions carried out on the issuer s securitues Mandatory disclosure of any yprecise inside information that may have an effect on the issuer s securities prices Implementation by the issuer of proper internal rules and procedures 15

16 Measures against market manipulation: Prohibition against disseminating false and misleading information Prohibition to carry out any behaviour or transaction that may result in the setting of an artificial price of listed securities Exception for safe harbour transactions carried out in order to stabilize the prices of a given listed security in the first days of trading 16

17 The role of the national authorities Heavy monitoring of the issuers Heavy monitoring of the market Relevant inquiry and enforcement powers Power to impose hefty fines and criminal penalties 17