WRITTEN QUESTION P-2818/02

by Theresa Villiers (PPE-DE) to the Commission

(1 October 2002)

Subject: Market abuse directive and journalists

1. Could the Commission state whether it believes that journalists will be covered by Article 6(5) of the market abuse directive (as set out in the latest common position from the Council procedure 2001/0118(COD))?

2. Can the Commission confirm whether this article is confined to the research, analysis and output of financial institutions and will not be used to regulate financial or other journalists?

3. If the Commission is of the view that Article 6(5) (as contained in Council position 2001/0118(COD)) does or should cover journalists:

(a) Can the Commission comment on whether the provision relating to journalists in Article 1(c) (as contained in Council position 2001/0118(COD)) has any impact on Article 6(5) and if so can the Commission state what that that impact will be?

(b) Does the Commission believe that it is appropriate for journalists to be covered by CESR implementing measures under Article 6(10) (as contained on Council position 2001/0118(COD))?

(c) Does the Commission foresee any problems if securities regulators start to cut across the remit of existing specialist institutions and authorities which currently regulate journalists?

(d) Does the Commission accept that a range of methods of managing conflicts of interest can be useful and that disclosure is just one of a number of different available methods for protecting investors against harm arising from such conflicts?

Answer given by Mr Bolkestein on behalf of the Commission

(25 October 2002)

1. The text of the Common Position was unanimously agreed by Member States. It has integrated most of Parliament's amendments from First Reading in March 2002, in particular those with regard to the situation of journalists.

The text of Article 6(5) is clear: it is general in purpose therefore not targeted only at some professions. The Article covers any persons recommending or suggesting investment strategy, whatever means they use.

In practice, this will not include financial journalists when they only write any general information about issuers. However, it will include financial journalists when they recommend to purchase or sell securities. There is no reason to exempt a particular category of persons because what is covered by this provision covers behaviour. Such a provision is crucial for increasing market transparency and, therefore, for restoring public confidence into European financial markets.

2. As mentioned above, Article 6(5) covers persons recommending or suggesting an investment strategy. Article 6(5) does not contain provisions regulating journalists or financial journalists in general. It only covers a particular type of behaviour which, sometimes, can apply to certain financial journalists.

As the text of Article 6(5) and Recital 22 state clearly, the purpose is to get appropriate regulation in place to ensure compliance with the requirements. Appropriate regulation can be self regulation, as explicitly stated by Recital 22.

3. (a) Article 1 contains the definitions for the Market Abuse Directive (at the stage of a second reading in the Parliament). In particular, Article 1(2)c contains the definition of what constitutes market manipulation in the form of dissemination of false information. This definition includes specific protection for journalists acting in their professional capacity. The definition of Article 1(2)c, as all the other definitions of Article 1, applies to the Market Abuse Directive as a whole.

(b) The Committee of European Securities Regulators (CESR) has yet to give to the Commission a technical (not legal) advice on the possible content of implementing measures (the agreed deadline was end-year 2002). The final proposal for a legal text on implementing measures will be prepared by the Commission, which will be responsible vis-à-vis the Parliament and Member States. The Commission will clearly appraise the technical advice forwarded by CESR.

Moreover, at this stage, no decision has been taken by CESR on the content of its final advice. CESR has only produced a consultative paper in order to get opinions from all categories of market participants. CESR will now have to examine these expressed opinions before delivering its final advice to the Commission.

(c) The Market Abuse Directive does not cover journalists in general, but only the few producing or disseminating investment recommendations. For those few journalists, Article 1(2)c requires that the rules governing their profession have to be taken into account. This Article, as well as Article 6(5) and Recital 22 make clear that neither existing rules nor existing specialist institutions or authorities currently regulating journalists are threatened by the Market Abuse Directive. On the contrary, the text of the Directive maintains all existing and various ways to regulate journalists, including self regulation. With regard to the work of CESR in its role as advisor on implementing measures, see answer to question 2b above.

(d) The Commission believes that a range of methods of managing conflicts of interest can always be useful in order to prevent from market abuse. Recent developments and events on financial markets both in the United States and in Europe have, however, proved that transparency is crucial for the integrity and smooth functioning of financial markets. Transparency certainly has a key role for restoring public confidence into those markets.