Directive 2003/6/EC of the European Parliament and of the Council of 28 January 2003 on insider dealing and market manipulation (market abuse)
Date: 2003-01-28
Institutions: Council of the European Union, European Parliament
Subjects: approximation of laws, dissemination of information, financial legislation, insider trading, securities

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Official Journal of the European Union

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DIRECTIVE 2003/6/EC OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL

of 28 January 2003

on insider dealing and market manipulation (market abuse)

THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE
EUROPEAN UNION,

Having regard to the Treaty establishing the European
Community, and in particular Article 95 thereof,

Having regard to the proposal from the Commission (1),

Having regard to the opinion of the European Economic and
Social Committee (2),

Having regard to the opinion of the European Central Bank (3),

Acting in accordance with the procedure laid down in Article
251 (4),

Whereas:

(1)

(2)

(3)

(4)

A genuine Single Market for financial services is crucial
for economic growth and job creation in the Commu-
nity.

An integrated and efficient
financial market requires
market integrity. The smooth functioning of securities
markets and public confidence in markets are prerequi-
sites for economic growth and wealth. Market abuse
harms the integrity of
financial markets and public
confidence in securities and derivatives.

The Commission Communication of 11 May 1999
entitled ‘Implementing the framework for
financial
markets: action plan’ identifies a series of actions that
are needed in order to complete the single market for
financial services. The Lisbon European Council of April
2000 called for the implementation of that action plan
by 2005. The action plan stresses the need to draw up a
Directive against market manipulation.

At its meeting on 17 July 2000, the Council set up the
Committee of Wise Men on the Regulation of European
Securities Markets. In its final report, the Committee of
Wise Men proposed the introduction of new legislative
techniques based on a four-level approach, namely
framework principles, implementing measures, coopera-
tion and enforcement. Level 1,
the Directive, should
confine itself to broad general
‘framework’ principles
implementing
while Level 2 should contain technical
measures to be adopted by the Commission with the
assistance of a committee.

(1) OJ C 240 E, 28.8.2001, p. 265.
(2) OJ C 80, 3.4.2002, p. 61.
(3) OJ C 24, 26.1.2002, p. 8.
(4) Opinion of the European Parliament of 14 March 2002 (not yet
published in the Official Journal), Council Common Position of 19
July 2002 (OJ C 228 E, 25.9.2002, p. 19) and Decision of the
European Parliament of 24 October 2002 (not yet published in the
Official Journal).

(5)

(6)

(7)

(8)

(9)

The Resolution adopted by the Stockholm European
Council of March 2001 endorsed the final report of the
Committee of Wise Men and the proposed four-level
approach to make the regulatory process for Community
securities legislation more efficient and transparent.

the European Parliament of 5
The Resolution of
February 2002 on the implementation of
financial
services legislation also endorsed the Committee of Wise
Men's report, on the basis of the solemn declaration
made before Parliament the same day by the Commis-
sion and the letter of 2 October 2001 addressed by the
Internal Market Commissioner to the chairman of Parlia-
ment's Committee on Economic and Monetary Affairs
with regard to the safeguards for the European Parlia-
ment's role in this process.

The measures necessary for the implementation of this
Directive should be adopted in accordance with Council
Decision 1999/468/EC of 28 June 1999 laying down
the procedures for the exercise of implementing powers
conferred on the Commission (5).

According to the Stockholm European Council, Level 2
implementing measures should be used more frequently,
to ensure that technical provisions can be kept up to
date with market and supervisory developments, and
deadlines should be set for all stages of Level 2 work.

The European Parliament should be given a period of
three months from the first transmission of draft imple-
menting measures to allow it to examine them and to
give its opinion. However, in urgent and duly justified
cases,
If, within that
period, a resolution is passed by the European Parlia-
ment,
the Commission should re-examine the draft
measures.

this period may be shortened.

(10) New financial and technical developments enhance the
incentives, means and opportunities for market abuse:
through new products, new technologies,
increasing
cross-border activities and the Internet.

(11)

The existing Community legal
framework to protect
market integrity is incomplete. Legal requirements vary
from one Member State to another,
leaving economic
actors often uncertain over concepts, definitions and
enforcement. In some Member States there is no legisla-
tion addressing the issues of price manipulation and the
dissemination of misleading information.

(5) OJ L 184, 17.7.1999, p. 23.

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(12) Market abuse consists of

insider dealing and market
manipulation. The objective of legislation against insider
dealing is the same as that of legislation against market
manipulation:
to ensure the integrity of Community
financial markets and to enhance investor confidence in
to adopt
therefore
those markets.
combined rules to combat both insider dealing and
market manipulation. A single Directive will ensure
throughout
the Community the same framework for
allocation of responsibilities, enforcement and coopera-
tion.

advisable

is

It

(13) Given the changes in financial markets and in Commu-
nity legislation since the adoption of Council Directive
89/592/EEC of 13 November 1989 coordinating regula-
tions on insider dealing (1), that Directive should now be
replaced, to ensure consistency with legislation against
market manipulation. A new Directive is also needed to
avoid loopholes in Community legislation which could
be used for wrongful conduct and which would under-
mine public confidence and therefore prejudice the
smooth functioning of the markets.

This Directive meets the concerns expressed by the
Member States following the terrorist attacks on 11
September 2001 as regards the fight against financing
terrorist activities.

(14)

(15)

(16)

full
Insider dealing and market manipulation prevent
and proper market transparency, which is a prerequisite
for trading for all economic actors in integrated financial
markets.

(21)

Inside information is any information of a precise nature
which has not been made public, relating, directly or
indirectly, to one or more issuers of financial
instru-
ments or to one or more financial instruments. Informa-
tion which could have a significant effect on the evolu-
tion and forming of the prices of a regulated market as
such could be considered as information which indir-
ectly relates to one or more issuers of financial instru-
ments or to one or more related derivative financial
instruments.

(17) As regards insider dealing, account should be taken of
cases where inside information originates not from a
profession or function but from criminal activities, the
preparation or execution of which could have a signifi-
cant effect on the prices of one or more financial instru-
ments or on price formation in the regulated market as
such.

(18) Use of inside information can consist in the acquisition
or disposal of financial
instruments by a person who
knows, or ought to have known, that the information
the
possessed is inside information.

In this respect,

competent authorities should consider what a normal
and reasonable person would know or should have
known in the circumstances. Moreover, the mere fact
that market-makers, bodies authorised to act as counter-
parties, or persons authorised to execute orders on
behalf of third parties with inside information confine
themselves, in the first two cases, to pursuing their legiti-
mate business of buying or selling financial instruments
or, in the last case, to carrying out an order dutifully,
should not in itself be deemed to constitute use of such
inside information.

(19) Member States should tackle the practice known as ‘front
running’, including ‘front running’ in commodity deriva-
tives, where it constitutes market abuse under the defini-
tions contained in this Directive.

(20) A person who enters into transactions or issues orders
to trade which are constitutive of market manipulation
may be able to establish that his reasons for entering
into such transactions or issuing orders to trade were
legitimate and that the transactions and orders to trade
were in conformity with accepted practice on the regu-
lated market concerned. A sanction could still be
the competent authority established that
imposed if
there was another,
reason behind these
transactions or orders to trade.

illegitimate,

The competent authority may issue guidance on matters
covered by this Directive, e.g. definition of inside infor-
mation in relation to derivatives on commodities or
the definition of accepted market
implementation of
practices relating to the definition of market manipula-
tion. This guidance should be in conformity with the
provisions of
implementing
the Directive and the
measures adopted in accordance with the comitology
procedure.

(22) Member States should be able to choose the most appro-
priate way to regulate persons producing or dissemi-
nating research concerning financial
instruments or
issuers of financial instruments or persons producing or
disseminating other
information recommending or
including appropriate
suggesting investment strategy,
mechanisms for self-regulation, which should be notified
to the Commission.

(23)

Posting of inside information by issuers on their internet
sites should be in accordance with the rules on transfer
of personal data to third countries as laid down in Direc-
tive 95/46/EC of the European Parliament and of the
Council of 24 October 1995 on the protection of indivi-
duals with regard to the processing of personal data and
on the movement of such data (2).

(1) OJ L 334, 18.11.1989, p. 30.

(2) OJ L 281, 23.11.1995, p. 31.

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(24)

‘grey lists’,

Prompt and fair disclosure of information to the public
enhances market integrity, whereas selective disclosure
by issuers can lead to a loss of investor confidence in the
integrity of
financial markets. Professional economic
actors should contribute to market integrity by various
means. Such measures could include, for instance, the
creation of
‘window
trading’ to sensitive categories of personnel, the applica-
tion of internal codes of conduct and the establishment
of ‘Chinese walls’. Such preventive measures may contri-
bute to combating market abuse only if
they are
enforced with determination and are dutifully controlled.
Adequate enforcement control would imply for instance
the designation of compliance officers within the bodies
concerned and periodic checks conducted by indepen-
dent auditors.

the application of

(25) Modern communication methods make it possible for
financial market professionals and private investors to
have more equal access to financial information, but also
increase the risk of the spread of false or misleading
information.

(26) Greater

transactions

transparency of

conducted by
persons discharging managerial responsibilities within
issuers and, where applicable, persons closely associated
with them, constitutes a preventive measure against
market abuse. The publication of those transactions on
at least an individual basis can also be a highly valuable
source of information to investors.

(27) Market operators should contribute to the prevention of
market abuse and adopt structural provisions aimed at
preventing and detecting market manipulation practices.
Such provisions may include requirements concerning
transparency of transactions concluded, total disclosure
of price-regularisation agreements, a fair system of order
pairing, introduction of an effective atypical-order detec-
tion scheme, sufficiently robust
instrument
reference price-fixing schemes and clarity of rules on the
suspension of transactions.

financial

(28)

This Directive should be interpreted, and implemented
in a manner consistent with the
by Member States,
requirements for effective regulation in order to protect
the interests of holders of transferable securities carrying
voting rights in a company (or which may carry such
rights as a consequence of the exercise of rights or
conversion) when the company is subject to a public
take-over bid or other proposed change of control. In
particular, this Directive does not in any way prevent a
Member State from putting or having in place such
measures as it sees fit for these purposes.

(29) Having access to inside information relating to another
company and using it in the context of a public take-
over bid for the purpose of gaining control of that

company or proposing a merger with that company
should not
in itself be deemed to constitute insider
dealing.

(30)

(31)

Since the acquisition or disposal of financial instruments
necessarily involves a prior decision to acquire or
dispose taken by the person who undertakes one or
other of these operations, the carrying out of this acqui-
sition or disposal should not be deemed in itself to
constitute the use of inside information.

Research and estimates developed from publicly avail-
able data should not be regarded as inside information
and, therefore, any transaction carried out on the basis
of such research or estimates should not be deemed in
itself to constitute insider dealing within the meaning of
this Directive.

(32) Member States and the European System of Central
Banks, national central banks or any other officially
designated body, or any person acting on their behalf,
should not be restricted in carrying out monetary,
exchange-rate or public debt management policy.

(33)

(34)

(35)

Stabilisation of financial instruments or trading in own
shares in buy-back programmes can be legitimate,
in
certain circumstances, for economic reasons and should
in themselves be regarded as market
not,
should be developed to
abuse. Common standards
provide practical guidance.

therefore,

financial markets,

the rapid
The widening scope of
change and the range of new products and develop-
ments require a wide application of this Directive to
financial instruments and techniques involved, in order
to guarantee the integrity of Community financial
markets.

Establishing a level playing field in Community financial
markets requires wide geographical application of the
provisions covered by this Directive. As regards deriva-
tive instruments not admitted to trading but
falling
within the scope of this Directive, each Member State
should be competent to sanction actions carried out on
its territory or abroad which concern underlying finan-
cial
instruments admitted to trading on a regulated
market situated or operating within its territory or for
which a request for admission to trading on such a regu-
lated market has been made. Each Member State should
also be competent to sanction actions carried out on its
territory which concern underlying financial instruments
admitted to trading on a regulated market in a Member
State or for which a request for admission to trading on
such a market has been made.

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(36) A variety of competent authorities in Member States,
having different responsibilities, may create confusion
among economic actors. A single competent authority
should be designated in each Member State to assume at
least final responsibility for supervising compliance with
the provisions adopted pursuant to this Directive, as well
as international collaboration. Such an authority should
be of an administrative nature guaranteeing its indepen-
dence of economic actors and avoiding conflicts of
interest. In accordance with national law, Member States
should ensure appropriate financing of the competent
authority. That authority should have adequate arrange-
ments for consultation concerning possible changes in
national
legislation such as a consultative committee
composed of representatives of issuers, financial services
providers and consumers, so as to be fully informed of
their views and concerns.

(37) A common minimum set of effective tools and powers
for the competent authority of each Member State will
guarantee supervisory effectiveness. Market undertakings
and all economic actors should also contribute at their
level to market integrity. In this sense, the designation of
a single competent authority for market abuse does not
exclude collaboration links or delegation under
the
responsibility of the competent authority, between that
authority and market undertakings with a view to guar-
anteeing efficient supervision of compliance with the
provisions adopted pursuant to this Directive.

(38)

In order to ensure that a Community framework against
market abuse is sufficient, any infringement of the prohi-
to this
bitions or requirements laid down pursuant
Directive will have to be promptly detected and sanc-
tioned. To this end, sanctions should be sufficiently
dissuasive and proportionate to the gravity of the infrin-
gement and to the gains realised and should be consis-
tently applied.

(39) Member States should remain alert, in determining the
administrative measures and sanctions, to the need to
ensure a degree of uniformity of regulation from one
Member State to another.

(40)

Increasing cross-border activities require improved coop-
eration and a comprehensive set of provisions for the
information between national competent
exchange of
authorities. The organisation of supervision and of inves-
tigatory powers in each Member State should not hinder
cooperation between the competent national authorities.

(41)

Since the objective of the proposed action, namely to
prevent market abuse in the form of insider dealing and
market manipulation, cannot be sufficiently achieved by

the Member States and can therefore, by reason of the
scale and effects of the measures, be better achieved at
Community level, the Community may adopt measures,
in accordance with the principle of subsidiarity as set
out in Article 5 of the Treaty. In accordance with the
principle of proportionality, as set out in that Article,
this Directive does not go beyond what is necessary in
order to achieve that objective.

(42)

empowered to adopt

Technical guidance and implementing measures for the
rules laid down in this Directive may from time to time
be necessary to take account of new developments on
financial markets. The Commission should accordingly
implementing measures,
be
provided that these do not modify the essential elements
of this Directive and the Commission acts according to
the principles set out in this Directive, after consulting
the European Securities Committee
established by
Commission Decision 2001/528/EC (1).

(43)

In exercising its implementing powers in accordance
with this Directive, the Commission should respect the
following principles:

— the need to ensure confidence in financial markets
among investors by promoting high standards of
transparency in financial markets,

— the need to provide investors with a wide range of
competing investments and a level of disclosure and
protection tailored to their circumstances,

— the need to ensure that

regulatory
authorities enforce the rules consistently, especially
as regards the fight against economic crime,

independent

— the need for high levels of transparency and consul-
tation with all market participants and with the
European Parliament and the Council,

— the need to encourage

innovation in financial

markets if they are to be dynamic and efficient,

— the need to ensure market integrity by close and

reactive monitoring of financial innovation,

— the

importance of
increasing access to, capital,

reducing the

cost of,

and

— the balance of costs and benefits to market partici-
pants on a long-term basis (including small and
medium-sized businesses and small investors) in any
implementing measures,

— the need to foster the international competitiveness
of EU financial markets without prejudice to a
much-needed extension of international cooperation,

(1) OJ L 191, 13.7.2001, p. 45.

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— the need to achieve a level playing field for all
market participants by establishing EU-wide regula-
tions every time it is appropriate,

2.

‘Market manipulation’ shall mean:

(a) transactions or orders to trade:

— the need to respect differences in national markets
where these do not unduly impinge on the coher-
ence of the single market,

— which give, or are likely to give, false or misleading
signals as to the supply of, demand for or price of
financial instruments, or

— the need to ensure coherence with other Community
legislation in this area, as imbalances in information
and a lack of transparency may jeopardise the opera-
tion of the markets and above all harm consumers
and small investors.

(44)

the fundamental

This Directive respects
rights and
observes the principles recognised in particular by the
Charter of Fundamental Rights of the European Union
and in particular by Article 11 thereof and Article 10 of
the European Convention on Human Rights.
In this
regard,
in any way prevent
Member States from applying their constitutional rules
relating to freedom of the press and freedom of expres-
sion in the media,

this Directive does not

HAVE ADOPTED THIS DIRECTIVE:

Article 1

For the purposes of this Directive:

1.

‘Inside information’ shall mean information of a precise
nature which has not been made public, relating, directly or
indirectly, to one or more issuers of financial instruments or
to one or more financial instruments and which, if it were
made public, would be likely to have a significant effect on
the prices of those financial instruments or on the price of
related derivative financial instruments.

In relation to derivatives on commodities,
‘inside informa-
tion’ shall mean information of a precise nature which has
not been made public, relating, directly or indirectly, to one
or more such derivatives and which users of markets on
which such derivatives are traded would expect to receive in
accordance with accepted market practices on those
markets.

charged with the

execution of orders
For persons
concerning financial instruments,
‘inside information’ shall
also mean information conveyed by a client and related to
the client's pending orders, which is of a precise nature,
which relates directly or indirectly to one or more issuers of
financial
instru-
instruments or to one or more financial
ments, and which, if it were made public, would be likely to
have a significant effect on the prices of those financial
instruments or on the price of related derivative financial
instruments.

— which secure, by a person, or persons acting in
collaboration, the price of one or several financial
instruments at an abnormal or artificial level,

unless the person who entered into the transactions or
issued the orders to trade establishes that his reasons for
so doing are legitimate and that these transactions or
orders to trade conform to accepted market practices on
the regulated market concerned;

(b) transactions or orders to trade which employ fictitious
devices or any other form of deception or contrivance;

(c) dissemination of

information through the media,
including the Internet, or by any other means, which
gives, or is likely to give, false or misleading signals as
to financial instruments, including the dissemination of
rumours and false or misleading news, where the person
who made the dissemination knew, or ought to have
known, that the information was false or misleading. In
respect of journalists when they act in their professional
capacity such dissemination of
information is to be
assessed, without prejudice to Article 11, taking into
account
the rules governing their profession, unless
those persons derive, directly or indirectly, an advantage
or profits from the dissemination of the information in
question.

In particular, the following instances are derived from
the core definition given in points (a), (b) and (c) above:

— conduct by a person, or persons acting in collabora-
tion, to secure a dominant position over the supply
of or demand for a financial instrument which has
the effect of fixing, directly or indirectly, purchase or
sale prices or creating other unfair trading condi-
tions,

— the buying or selling of financial instruments at the
close of the market with the effect of misleading
investors acting on the basis of closing prices,

— taking advantage of occasional or regular access to
the traditional or electronic media by voicing an
opinion about a financial instrument (or indirectly
about its issuer) while having previously taken posi-
tions on that
instrument and profiting
subsequently from the impact of the opinions voiced
on the price of
instrument, without having
simultaneously disclosed that conflict of interest to
the public in a proper and effective way.

financial

that

The definitions of market manipulation shall be
adapted so as to ensure that new patterns of activity
that in practice constitute market manipulation can
be included.

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3.

‘Financial instrument’ shall mean:

— transferable securities as defined in Council Directive 93/
22/EEC of 10 May 1993 on investment services in the
securities field (1),

— units in collective investment undertakings,

— money-market instruments,

— financial-futures contracts,

including equivalent cash-

settled instruments,

— forward interest-rate agreements,

— interest-rate, currency and equity swaps,

— options to acquire or dispose of any instrument falling
including equivalent cash-settled
into these categories,
instruments. This category includes in particular options
on currency and on interest rates,

— derivatives on commodities,

— any other instrument admitted to trading on a regulated
market in a Member State or for which a request for
admission to trading on such a market has been made.

4.

5.

‘Regulated market’ shall mean a market as defined by Article
1(13) of Directive 93/22/EEC.

‘Accepted market practices’ shall mean practices that are
reasonably expected in one or more financial markets and
are accepted by the competent authority in accordance with
guidelines adopted by the Commission in accordance with
the procedure laid down in Article 17(2).

6.

‘Person’ shall mean any natural or legal person.

7.

‘Competent authority’ shall mean the competent authority
designated in accordance with Article 11.

In order to take account of developments on financial markets
and to ensure uniform application of this Directive in the
Community, the Commission, acting in accordance with the
procedure laid down in Article 17(2), shall adopt implementing
measures concerning points 1, 2 and 3 of this Article.

Article 2

1. Member States shall prohibit any person referred to in
the second subparagraph who possesses inside information
from using that information by acquiring or disposing of, or by
trying to acquire or dispose of, for his own account or for the
account of a third party, either directly or indirectly, financial
instruments to which that information relates.

The first subparagraph shall apply to any person who possesses
that information:

(a) by virtue of his membership of the administrative, manage-

ment or supervisory bodies of the issuer; or

(b) by virtue of his holding in the capital of the issuer; or

(c) by virtue of his having access to the information through
the exercise of his employment, profession or duties; or

(d) by virtue of his criminal activities.

(1) OJ L 141, 11.6.1993, p. 27. Directive as last amended by European
and Council Directive 2000/64/EC (OJ L 290,

Parliament
17.11.2000, p. 27).

2. Where the person referred to in paragraph 1 is a legal
person, the prohibition laid down in that paragraph shall also
apply to the natural persons who take part in the decision to
carry out the transaction for the account of the legal person
concerned.

3.
This Article shall not apply to transactions conducted in
the discharge of an obligation that has become due to acquire
or dispose of financial instruments where that obligation results
from an agreement concluded before the person concerned
possessed inside information.

Article 3

Member States shall prohibit any person subject to the prohibi-
tion laid down in Article 2 from:

(a) disclosing inside information to any other person unless
such disclosure is made in the normal course of the exer-
cise of his employment, profession or duties;

(b) recommending or inducing another person, on the basis of
inside information, to acquire or dispose of financial instru-
ments to which that information relates.

Article 4

Member States shall ensure that Articles 2 and 3 also apply to
any person, other than the persons referred to in those Articles,
who possesses inside information while that person knows, or
ought to have known, that it is inside information.

Article 5

Member States shall prohibit any person from engaging in
market manipulation.

Article 6

1. Member States shall ensure that issuers of financial instru-
ments inform the public as soon as possible of inside informa-
tion which directly concerns the said issuers.

Without prejudice to any measures taken to comply with the
provisions of
the first subparagraph, Member States shall
ensure that issuers, for an appropriate period, post on their
Internet sites all inside information that they are required to
disclose publicly.

2.
An issuer may under his own responsibility delay the
public disclosure of inside information, as referred to in para-
to prejudice his legitimate interests
graph 1, such as not
provided that such omission would not be likely to mislead the
public and provided that the issuer is able to ensure the confi-
dentiality of that information. Member States may require that
an issuer shall without delay inform the competent authority of
the decision to delay the public disclosure of inside informa-
tion.

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3. Member States shall require that, whenever an issuer, or a
person acting on his behalf or for his account, discloses any
inside information to any third party in the normal exercise of
his employment, profession or duties, as referred to in Article
3(a), he must make complete and effective public disclosure of
that information, simultaneously in the case of an intentional
disclosure and promptly in the case of a non-intentional disclo-
sure.

The provisions of the first subparagraph shall not apply if the
person receiving the information owes a duty of confidentiality,
regardless of whether such duty is based on a law, on regula-
tions, on articles of association or on a contract.

9. Member States shall require that any person profession-
ally arranging transactions in financial instruments who reason-
ably suspects that a transaction might constitute insider dealing
or market manipulation shall notify the competent authority
without delay.

10.
In order to take account of technical developments on
financial markets and to ensure uniform application of this
Directive, the Commission shall adopt, in accordance with the
procedure referred to in Article 17(2), implementing measures
concerning:

— the technical modalities for appropriate public disclosure of
inside information as referred to in paragraphs 1 and 3,

Member States shall require that issuers, or persons acting on
their behalf or for their account, draw up a list of those persons
working for them, under a contract of employment or other-
wise, who have access to inside information.
Issuers and
persons acting on their behalf or for their account shall regu-
larly update this list and transmit it to the competent authority
whenever the latter requests it.

— the technical modalities for delaying the public disclosure

of inside information as referred to in paragraph 2,

— the technical modalities designed to favour a common
approach in the implementation of the second sentence of
paragraph 2,

4.
Persons discharging managerial responsibilities within an
issuer of financial instruments and, where applicable, persons
closely associated with them, shall, at
least, notify to the
competent authority the existence of transactions conducted on
their own account relating to shares of the said issuer, or to
derivatives or other
instruments linked to them.
Member States shall ensure that public access to information
concerning such transactions, on at least an individual basis, is
readily available as soon as possible.

financial

5. Member States shall ensure that there is appropriate regu-
lation in place to ensure that persons who produce or dissemi-
nate research concerning financial
instruments or issuers of
financial instruments and persons who produce or disseminate
other information recommending or suggesting investment
strategy, intended for distribution channels or for the public,
take reasonable care to ensure that such information is fairly
presented and disclose their interests or indicate conflicts of
instruments to which that
interest concerning the financial
information relates. Details of such regulation shall be notified
to the Commission.

6. Member States shall ensure that market operators adopt
structural provisions aimed at preventing and detecting market
manipulation practices.

— the conditions under which issuers, or entities acting on
their behalf, are to draw up a list of those persons working
for them and having access to inside information, as
referred to in paragraph 3, together with the conditions
under which such lists are to be updated,

— the categories of persons who are subject to a duty of
disclosure as referred to in paragraph 4 and the characteris-
tics of a transaction, including its size, which trigger that
duty, and the technical arrangements for disclosure to the
competent authority,

— technical arrangements, for the various categories of person
referred to in paragraph 5, for fair presentation of research
and other information recommending investment strategy
and for disclosure of particular interests or conflicts of
interest as referred to in paragraph 5. Such arrangements
shall take into account the rules, including self-regulation,
governing the profession of journalist,

— technical

arrangements governing notification to the
competent authority by the persons referred to in para-
graph 9.

Article 7

7. With a view to ensuring compliance with paragraphs 1 to
5, the competent authority may take all necessary measures to
ensure that the public is correctly informed.

8.
Public institutions disseminating statistics liable to have a
significant effect on financial markets shall disseminate them in
a fair and transparent way.

This Directive shall not apply to transactions carried out in
pursuit of monetary, exchange-rate or public debt-management
policy by a Member State, by the European System of Central
Banks, by a national central bank or by any other officially
designated body, or by any person acting on their behalf.
Member States may extend this exemption to their federated
States or similar local authorities in respect of the management
of their public debt.

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Article 8

Article 12

The prohibitions provided for in this Directive shall not apply
to trading in own shares in ‘buy-back’ programmes or to the
stabilisation of a financial instrument provided such trading is
carried out in accordance with implementing measures adopted
in accordance with the procedure laid down in Article 17(2).

Article 9

This Directive shall apply to any financial instrument admitted
to trading on a regulated market in at least one Member State,
or for which a request for admission to trading on such a
market has been made, irrespective of whether or not the trans-
action itself actually takes place on that market.

Articles 2, 3 and 4 shall also apply to any financial instrument
not admitted to trading on a regulated market in a Member
State, but whose value depends on a financial instrument as
referred to in paragraph 1.

Article 6(1) to (3) shall not apply to issuers who have not
requested or approved admission of their financial instruments
to trading on a regulated market in a Member State.

Article 10

Each Member State shall apply the prohibitions and require-
ments provided for in this Directive to:

(a) actions carried out on its territory or abroad concerning
financial
instruments that are admitted to trading on a
regulated market situated or operating within its territory
or for which a request for admission to trading on such
market has been made;

(b) actions carried out on its territory concerning financial
instruments that are admitted to trading on a regulated
market in a Member State or for which a request for admis-
sion to trading on such market has been made.

Article 11

1.
The competent authority shall be given all supervisory
and investigatory powers that are necessary for the exercise of
its functions. It shall exercise such powers:

(a) directly; or

(b) in collaboration with other authorities or with the market

undertakings; or

(c) under its responsibility by delegation to such authorities or

to the market undertakings; or

(d) by application to the competent judicial authorities.

2. Without prejudice to Article 6(7), the powers referred to
in paragraph 1 of this Article shall be exercised in conformity
with national law and shall include at least the right to:

(a) have access to any document in any form whatsoever, and

to receive a copy of it;

(b) demand information from any person, including those who
are successively involved in the transmission of orders or
conduct of the operations concerned, as well as their prin-
cipals, and if necessary, to summon and hear any such
person;

(c) carry out on-site inspections;

(d) require existing telephone and existing data traffic records;

(e) require the cessation of any practice that is contrary to the
provisions adopted in the implementation of this Directive;

(f) suspend trading of the financial instruments concerned;

(g) request the freezing and/or sequestration of assets;

(h) request temporary prohibition of professional activity.

This Article shall be without prejudice to national legal

3.
provisions on professional secrecy.

Article 13

The obligation of professional secrecy shall apply to all persons
who work or who have worked for the competent authority or
for any authority or market undertaking to whom the compe-
tent authority has delegated its powers, including auditors and
experts instructed by the competent authority.
Information
covered by professional secrecy may not be disclosed to any
other person or authority except by virtue of provisions laid
down by law.

Without prejudice to the competences of the judicial authori-
ties, each Member State shall designate a single administrative
authority competent
the provisions adopted
to ensure that
pursuant to this Directive are applied.

Article 14

Member States shall establish effective consultative arrange-
ments and procedures with market participants concerning
possible changes in national
legislation. These arrangements
may include consultative committees within each competent
authority, the membership of which should reflect as far as
possible the diversity of market participants, be they issuers,
providers of financial services or consumers.

1. Without prejudice to the right of Member States to
in
impose criminal sanctions, Member States shall ensure,
conformity with their national law, that the appropriate admin-
istrative measures can be taken or administrative sanctions be
imposed against the persons responsible where the provisions
adopted in the implementation of this Directive have not been
complied with. Member States shall ensure that these measures
are effective, proportionate and dissuasive.

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Official Journal of the European Union

12.4.2003

In accordance with the procedure laid down in Article
2.
17(2), the Commission shall, for information, draw up a list of
the administrative measures and sanctions referred to in para-
graph 1.

3. Member States shall determine the sanctions to be applied
for failure to cooperate in an investigation covered by Article
12.

4. Member States shall provide that the competent authority
may disclose to the public every measure or sanction that will
be imposed for infringement of the provisions adopted in the
implementation of this Directive, unless such disclosure would
seriously jeopardise the financial markets or cause dispropor-
tionate damage to the parties involved.

Article 15

Member States shall ensure that an appeal may be brought
before a court against the decisions taken by the competent
authority.

Article 16

Competent authorities shall cooperate with each other
1.
their
whenever necessary for the purpose of carrying out
duties, making use of their powers whether set out in this
Directive or in national law. Competent authorities shall render
assistance to competent authorities of other Member States. In
particular, they shall exchange information and cooperate in
investigation activities.

shall, on request,

Competent authorities

2.
immediately
supply any information required for the purpose referred to in
paragraph 1. Where necessary,
the competent authorities
receiving any such request shall immediately take the necessary
measures in order to gather the required information. If the
requested competent authority is not able to supply the
required information immediately, it shall notify the requesting
competent authority of the reasons. Information thus supplied
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.

The competent authorities may refuse to act on a request for
information where:

— communication might adversely affect

the sovereignty,

security or public policy of the Member State addressed,

— judicial proceedings have already been initiated in respect
of the same actions and against the same persons before
the authorities of the Member State addressed, or

— where a final judgment has already been delivered in rela-
tion to such persons for the same actions in the Member
State addressed.

In any such case, they shall notify the requesting competent
authority accordingly, providing as detailed information as
possible on those proceedings or the judgment.

Without prejudice to Article 226 of the Treaty, a competent
authority whose request for information is not acted upon
within a reasonable time or whose request for information is

rejected may bring that non-compliance to the attention of the
Committee of European Securities Regulators, where discussion
will take place in order to reach a rapid and effective solution.

law,

Without prejudice to the obligations to which they are subject
in judicial proceedings under criminal
the competent
authorities which receive information pursuant to paragraph 1
may use it only for the exercise of their functions within the
scope of this Directive and in the context of administrative or
judicial proceedings specifically related to the exercise of those
functions. However, where the competent authority communi-
cating information consents thereto, the authority receiving the
information may use it for other purposes or forward it to
other States' competent authorities.

3. Where a competent authority is convinced that acts
contrary to the provisions of this Directive are being, or have
been, carried out on the territory of another Member State or
that acts are affecting financial instruments traded on a regu-
lated market situated in another Member State,
it shall give
notice of that fact in as specific a manner as possible to the
competent authority of the other Member State. The competent
authority of the other Member State shall take appropriate
action. It shall inform the notifying competent authority of the
outcome and, so far as possible, of significant interim develop-
ments. This paragraph shall not prejudice the competences of
the competent authority that has forwarded the information.
The competent authorities of the various Member States that
are competent for the purposes of Article 10 shall consult each
other on the proposed follow-up to their action.

4.
A competent authority of one Member State may request
that an investigation be carried out by the competent authority
of another Member State, on the latter's territory.

It may further request that members of its own personnel be
allowed to accompany the personnel of
the competent
authority of that other Member State during the course of the
investigation.

The investigation shall, however, be subject throughout to the
overall control of the Member State on whose territory it is
conducted.

The competent authorities may refuse to act on a request for
an investigation to be conducted as provided for in the first
subparagraph, or on a request for its personnel to be accompa-
nied by personnel of
the competent authority of another
Member State as provided for in the second subparagraph,
where such an investigation might adversely affect the sover-
eignty, security or public policy of the State addressed, or
where judicial proceedings have already been initiated in
respect of the same actions and against the same persons before
the authorities of the State addressed or where a final judgment
has already been delivered in relation to such persons for the
same actions in the State addressed. In such case, they shall
notify
accordingly,
competent
providing information, as detailed as possible, on those
proceedings or judgment.

requesting

authority

the

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Without prejudice to the provisions of Article 226 of the
Treaty, a competent authority whose application to open an
inquiry or whose request for authorisation for its officials to
accompany those of
the other Member State's competent
authority is not acted upon within a reasonable time or is
rejected may bring that non-compliance to the attention of the
Committee of European Securities Regulators, where discussion
will take place in order to reach a rapid and effective solution.

In accordance with the procedure laid down in Article
5.
17(2), the Commission shall adopt implementing measures on
the procedures for exchange of information and cross-border
inspections as referred to in this Article.

Article 17

1.
The Commission shall be assisted by the European Securi-
ties Committee instituted by Decision 2001/528/EC (hereinafter
referred to as the ‘Committee’).

2. Where reference is made to this paragraph, Articles 5 and
7 of Decision 1999/468/EC shall apply, having regard to the
provisions of Article 8 thereof, provided that the implementing
measures adopted according to this procedure do not modify
the essential provisions of this Directive.

The period laid down in Article 5(6) of Decision 1999/468/EC
shall be set at three months.

3.

The Committee shall adopt its rules of procedure.

4. Without prejudice to the implementing measures already
adopted, on the expiry of a four–year period following the
entry into force of this Directive, the application of its provi-
sions requiring the adoption of technical rules and decisions in
accordance with paragraph 2 shall be suspended. On a
proposal from the Commission, the European Parliament and
the Council may renew the provisions concerned in accordance
with the procedure laid down in Article 251 of the Treaty and,
to that end, they shall review them prior to the expiry of the
period referred to above.

Article 18

Member States shall bring into force the laws, regulations and
administrative provisions necessary to comply with this Direc-
tive not later than 12 October 2004. They shall forthwith
inform the Commission thereof.

When Member States adopt those measures, they shall contain
a reference to this Directive or be accompanied by such a refer-
ence on the occasion of their official publication. Member
States shall determine how such reference is to be made.

Article 19

Article 11 shall not prejudge the possibility for a Member State
to make separate legal and administrative arrangements for
overseas European territories for whose external relations that
Member State is responsible.

Article 20

Directive 89/592/EEC and Article 68(1) and Article 81(1) of
Directive 2001/34/EC of the European Parliament and of the
Council of 28 May 2001 on the admission of securities to offi-
cial stock exchange listing and on information to be published
on those securities (1) shall be repealed with effect from the date
of entry into force of this Directive.

Article 21

This Directive shall enter into force on the day of its publica-
tion in the Official Journal of the European Union.

This Directive is addressed to the Member States.

Article 22

Done at Brussels, 28 January 2003.

For the Parliament

The President

P. COX

For the Council

The President

G. PAPANDREOU

(1) OJ L 184, 6.7.2001, p. 1.