27. 10. 88 Official Journal of the European Communities No C 277/13 
II 
(Preparatory Acts) 
COMMISSION 
Amendment to the proposal for a Council Directive coordinating regulations on insider 
trading (') 
COM(88) 549 final — SYN 85 
(Presented by the Commission pursuant to the third paragraph of Article 149 of the EEC Treaty on 
4 October 1988) 
(88/C 277/18) 
O OJ No C 153, 11. 6. 1987, p. 8. 
ORIGINAL PROPOSAL AMENDED PROPOSAL 
THE COUNCIL OF THE EUROPEAN COMMUNITIES, 
Having regard to the Treaty establishing the European 
Economic Community, and in particular Article 54 
thereof, 
Having regard to the proposal from the Commission, 
Having regard to the opinion of the European 
Parliament, 
Having regard to the opinion of the Economic and 
Social Committee, 
Whereas Article 54 (3) (g) provides that the Council 
shall coordinate to the necessary extent the safeguards 
which, for the protection of the interests of members and 
others, are required by Member States of companies or 
firms within the meaning of the second paragraph of 
Article 58 with a view to making such safeguards 
equivalent throughout the Community; 
Whereas the secondary market in transferable securities 
plays an important role in the financing of undertakings; 
Whereas, for it to be able to play that role effectively, 
every possible measure should be taken to ensure that 
that market operates smoothly; 
Whereas the smooth operation of the secondary market 
depends to a large extent on the confidence it inspires in 
investors; 
Whereas one of the factors on which such confidence 
depends is the assurance afforded to investors that they 
are placed on an equal footing; THE COUNCIL OF THE EUROPEAN COMMUNITIES, 
Having regard to the Treaty establishing the European 
Economic Community, and in particular Article 100 (a) 
thereof, 
Unchanged 
In cooperation with the European Parliament, 
Unchanged 
Whereas Article 100 (a) (1) states that the Council shall 
adopt the measures for the approximation of the 
provisions laid down by law, regulation or administrative 
action in Member States which have as their object the 
establishment and functioning of the internal market; 
Unchanged 
Unchanged 
Unchanged 
Unchanged 
No C 277/14 Official Journal of the European Communities 27. 10. 88 
ORIGINAL PROPOSAL AMENDED PROPOSAL 
Whereas insider trading, by benefiting certain investors Unchanged 
at the expense of others, is likely to undermine that 
confidance and may therefore prejudice the smooth 
operation of the secondary market in transferable 
securities; 
Whereas it is therefore necessary to take all appropriate Unchanged 
measures to combat insider trading; 
Whereas in most Member States there are no rules or Unchanged 
regulations prohibiting insider trading; whereas the rules 
or regulations that do exist differ appreciably between 
Member States; 
Whereas it is therefore necessary to adopt coordinated Unchanged 
Community rules in this field; 
Whereas such coordinated rules also have the advantage Unchanged 
of helping, through cooperation between the competent 
authorities, to combat transfrontier insider trading more 
effectively, 
HAS ADOPTED THIS DIRECTIVE: HAS ADOPTED THIS DIRECTIVE: 
Article 1 
1. Member States shall prohibit any person who, in 
the exercise of his profession or duties, acquires inside 
information as defined in Article 6 from taking 
advantage of that information to buy or sell on their 
territory, either directly or through another person, 
transferable securities admitted to trading on their stock 
exchange markets. Article 1 
1. Member States shall prohibit any person who, in 
the exercise of his employment, profession or duties, 
acquires inside information as defined in Article 6 from 
taking advantage of that information to buy or sell on 
their territory, either directly or indirectly, transferable 
securities admitted to trading on their stock exchange 
markets. 
Where the purchase or sale of transferable securities is 
carried out on a stock exchange market, it shall be 
deemed to be carried out on the territory of the Member 
State in which the stock exchange in question is situated 
or operates. Unchanged 
Where the purchase or sale of transferable securities is 
carried out outside a stock exchange market, it shall be 
deemed to be carried out on the territory of the Member 
State in which the counterpart of the person referred to 
in the first subparagraph is resident. Unchanged 
2. The prohibition laid down in paragraph 1 shall not 
apply to transferable securities bought or sold outside a 
stock exchange market without the involvement of a 
professional intermediary. 2. Where the person referred to in paragraph 1 is a 
company or any other type of legal person, the 
prohibition laid down in that paragraph shall apply to its 
de jure or de facto directors. 
3. Member States may provide that the prohibition 
laid down in paragraph 1 shall not apply to transferable 
securities bought or sold outside a stock exchange 
market without the involvement of a professional inter­
mediary. 
27. 10. 88 Official Journal of 
ORIGINAL PROPOSAL 
Article 2 
Member States shall prohibit any person who is resident 
on their territory and who acquires inside information in 
the exercise of his profession or duties from: 
— disclosing that inside information to a third party 
unless such disclosure is made in the normal course 
of exercising his profession or duties: 
— using that inside information to recommend a third 
party to buy or sell transferable securities admitted to 
trading on their stock exchange markets. 
Article 3 
1. Member States shall impose the prohibition 
provided for in Article 1 in accordance with the terms 
referred to therein also on any person who has 
knowingly obtained inside information from a person 
who has acquired that information in the exercise of his 
profession or duties. 
2. Member States shall prohibit any person referred to 
in paragraph 1: 
— from disclosing the inside information to a third 
party; 
— from using that inside information to recommend a 
third party to buy or sell transferable securities 
admitted to trading on their stock exchange markets. 
Article 4 
Member States may lay down more stringent rules than 
those contained in this Directive provided that they are 
non-discriminatory. 
Article 5 
For the purposes of this Directive transferable securities 
shall include not only securities usually traded on the 
stock exchange market such as shares and debt securities 
but also traded options relating to such securities. European Communities No C 277/15 
AMENDED PROPOSAL 
4. This Directive shall not apply to transferable 
securities issued by a State or by its regional or local 
authorities. 
Article 2 
Member States shall prohibit any person who is resident 
on their territory and who acquires inside information in 
the exercise of his employment, profession or duties 
from: 
(a) disclosing that inside information to a third party 
unless such disclosure is made in the normal course 
of exercising his employment, profession or duties; 
(b) using that inside information to recommend a third 
party to buy or sell transferable securities admitted to 
trading on their stock exchange markets. 
Article 3 
1. Member States shall impose the prohibition 
provided for in Article 1 in accordance with the terms 
referred to therein also on any person who has 
knowingly obtained inside information from a person 
who acquired that information in the exercise of his 
employment, profession or duties. 
2. Member States shall prohibit any person referred to 
in paragraph 1 who is resident on their territory from: 
(a) disclosing the inside information to a third party; 
(b) using that inside information to recommend a third 
party to buy or sell transferable securities admitted to 
trading on their stock exchange markets. 
Article 4 
Unchanged 
Article 5 
Unchanged 
No C 277/16 Official Journal of the European Communities 27. 10. 88 
ORIGINAL PROPOSAL AMENDED PROPSAL 
Article 6 
For the purposes of this Directive, inside information is 
information unknown to the public of a specific nature 
and relating to one or more issuers of transferable 
securities, or to one or more transferable securities, 
which, if it were published, would be likely to have a 
material effect on the price of the transferable security or 
transferable securities in question. Article 6 
For the purposes of this Directive, inside information is 
information inaccessible or not available to the public of 
a specific nature and relating to one or more issuers of 
transferable securities or to one or more transferable 
securities, which, if it were published, would have a 
material effect on the price of the transferable security or 
transferable securities in question. 
Article 7 
1. Issuers whose transferable securities are admitted to 
official listing in one or more Member States or are 
traded there on another stock exchange market shall 
immediately inform the public in that Member State or 
those Member States of any circumstance or decision 
which would be likely to have a material effect on the 
price of such transferable securities. Article 7 
Unchanged 
2. Where an issuer is unable to inform the public 
immediately of a circumstance or decision as referred to 
in paragraph 1 because disclosure would prejudice its 
legitimate interests, it shall immediately inform the 
competent authorities thereof, who may relieve it of the 
obligation provided for in paragraph 1. Unchanged 
Article 8 
1. Member States shall designate the authority or 
authorities competent to ensure that the provisions 
adopted pursuant to this Directive are applied. They 
shall inform the Commission accordingly, indicating, if 
appropriate, how duties have been allocated. Article 8 
Unchanged 
2. The competent authorities shall be given all such 
supervisory powers as may be necessary for the exercise 
of their duties. 2. The competent authorities shall be given all such 
supervisory and investigatory powers as may be necessary 
for the exercise of their duties. 
3. The competent authorities in the Member States 
shall cooperate wherever necessary for the purpose of 
carrying out their duties and shall exchange any infor­
mation required for that purpose. Unchanged 
Article 9 
1. Member States shall provide that all persons 
employed or formerly employed by the competent auth­
orities referred to in Article 8 shall be bound by 
professional secrecy. Information covered by professional 
secrecy may not be divulged to any person or authority 
except by virtue of provisions laid down by law. Article 9 
Unchanged 
27. 10. 88 Official Journal of the European Communities No C 277/17 
ORIGINAL PROPOSAL 
2. Paragraph 1 shall not, however, preclude exchanges 
of information between the various Member States by 
the authorities referred to in Article 8 as provided for in 
this Directive. Information thus exchanged shall be 
covered by the obligation of professional secrecy to 
which the persons employed or formerly employed by 
the competent authorities receiving the information are 
subject. 
3. Without prejudice to cases falling under criminal 
law, the authorities referred to in Article 8 which receive 
information may use it only for the exercise of their 
duties and in connection with administrative or judicial 
proceedings specifically relating to the exercise of those 
duties. 
Article 10 
The Contact Committee set up by Article 20 of Council 
Directive 79/279/EEC of 5 March 1979 coordinating 
the conditions for the admission of securities to official 
stock exchange listing (l) shall also have as its function: 
(a) to facilitate the harmonized implementation of this 
Directive through regular consultations on ,any 
practical problems which arise from its application 
and on which exchanges of view are deemed useful; 
(b) to advise the Commission on any amendments to be 
made to this Directive. 
Article 11 
Member States shall determine the penalties to be 
applied for infringement of the measures taken pursuant 
to this Directive. 
Article 12 
1. Member States shall take the measures necessary to 
comply with this Directive not later than 31 December 
1990. They shall forthwith inform the Commission 
thereof. 
2. Member States shall communicate to the 
Commission the provisions of national law which they 
adopt in the field governed by this Directive. 
Article 13 
This Directive is addressed to the Member States. AMENDED PROPOSAL 
Unchanged 
Unchanged 
Article 10 
Unchanged 
Unchanged 
Unchanged 
Article 11 
Member States shall determine the penalties to be 
applied for infringement of the measures taken pursuant 
to this Directive. The penalties shall be sufficiently 
dissuasive to ensure respect for those measures. 
Article 12 
Unchanged 
Unchanged 
Article 13 
Unchanged 
(') OJ No L 66, 16. 3. 1979, p. 21.