In economics and finance, market abuse may arise in circumstances in which investors in a financial market have been unreasonably disadvantaged, directly or indirectly, by others who:[1]
- have used information which is not publicly available (insider dealing)
- have distorted the price-setting mechanism of financial instruments
- have disseminated false or misleading information (market manipulation)
Market abuse is split into two different aspects (under EU definitions):[1]
- Insider dealing: where a person who has information not available to other investors (for example, a director with knowledge of a takeover bid) makes use of that information for personal gain
- Market manipulation: where a person knowingly gives out false or misleading information (for instance, about a company's financial circumstances) in order to influence the price of a share for personal gain
In 2013/2014, the EU updated its legislation on market abuse,[2] and harmonised criminal sanctions. In the 2015 Danish European Union opt-out referendum, the Danish population rejected adoption of the 2014 market abuse directive (2014/57/EU) and much other legislation.
In the UK, the market abuse directive (MAD) was implemented in 2003 to reduce market abuse. It applied to any financial instrument admitted to trading on a regulated market or in respect of which a request for admission to trading had been made. MAD was subsequently replaced by the Market Abuse Regulation (MAR) in 2016.[3]
See also
editReferences
edit- ^ a b EU Legislation Summaries: Market abuse
- ^ Willemijn de Jong (21 January 2013). "Tackling financial market abuse in the EU" (PDF). Retrieved 18 December 2013.
- ^ "Market Abuse Regulation". FCA. 2016-05-04. Retrieved 2024-10-18.
Further reading
edit- Avgouleas, Emilios E (2005). The mechanics and regulation of market abuse: a legal and economic analysis. Oxford University Press. ISBN 978-019924452-2.
