Commission Directive 2004/72/EC of 29 April 2004 implementing Directive 2003/6/EC of the European Parliament and of the Council as regards accepted market practices, the definition of inside information in relation to derivatives on commodities, the drawing up of lists of insiders, the notification of managers' transactions and the notification of suspicious transactions (Text with EEA relevance)
Date: 2004-04-29
Institutions: European Commission
Subjects: dissemination of information, exchange of information, financial legislation, financial market, insider trading, securities

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COMMISSION DIRECTIVE 2004/72/EC

of 29 April 2004

implementing Directive 2003/6/EC of the European Parliament and of the Council as regards
accepted market practices, the definition of inside information in relation to derivatives on
commodities, the drawing up of lists of insiders, the notification of managers' transactions and the
notification of suspicious transactions

(Text with EEA relevance)

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

(3)

related markets

Particular market practices in a given market should not
put at risk market integrity of other, directly or indir-
ectly,
the Community,
whether those markets be regulated or not. Therefore,
the higher the risk for market integrity on such a related
market within the Community, the less those practices
are likely to be accepted by competent authorities.

throughout

Having regard to the Treaty establishing the European
Community,

Having regard to Directive 2003/6/EC of the European Parlia-
ment and of the Council of 28 January 2003 on insider dealing
and market manipulation (market abuse) (1), and in particular
the second paragraph of point 1 and point 2(a) of Article 1
fifth and seventh indents of Article 6(10)
and the fourth,
thereof,

After consulting the Committee of European Securities Regula-
tors (CESR) (2) for technical advice,

Whereas:

(1)

(2)

integrity.

Practising fairness and efficiency by market participants
is required in order not to create prejudice to normal
market activity and market
In particular,
market practices inhibiting the interaction of supply and
demand by limiting the opportunities for other market
participants to respond to transactions can create higher
risks for market integrity and are, therefore, less likely to
be accepted by competent authorities. On the other
hand, market practices which enhance liquidity are more
likely to be accepted than those practices reducing them.
Market practices
regulations
designed to prevent market abuse, or codes of conduct,
are less likely to be accepted by competent authorities.
Since market practices change rapidly in order to meet
investors' needs, competent authorities need to be alert
to new and emerging market practice.

breaching

rules

and

Transparency of market practices by market participants
is crucial for considering whether a particular market
practice can be accepted by competent authorities. The
less transparent a practice is, the more likely it is not to
be accepted. However, practices on non regulated
markets might for structural reasons be less transparent
than similar practices on regulated markets. Such prac-
tices should not be in themselves considered as unaccep-
table by competent authorities.

(1) OJ L 96, 12.4.2003, p. 16.
(2) CESR was established by Commission Decision 2001/527/EC of 6

June 2001 (OJ L 191, 13.7.2001, p. 43).

(4)

(5)

(6)

Competent authorities, while considering the acceptance
of a particular market practice, should consult other
competent authorities, particularly for cases where there
exist comparable markets to the one under scrutiny.
there might be circumstances in which a
However,
market practice can be deemed to be acceptable on one
particular market and unacceptable on another compar-
able market within the Community. In case of discrepan-
cies between market practices which are accepted in one
Member State and not in another one, discussion could
take place in the Committee of European Securities
Regulators in order to find a solution. With regard to
their decisions about such acceptance, competent autho-
rities should ensure a high degree of consultation and
transparency vis-à-vis market participants and end-users.

is essential

It
for market participants on derivative
markets the underlying of which is not a financial instru-
ment, to get greater legal certainty on what constitutes
inside information.

The establishment, by issuers or persons acting on their
behalf or for their account, of lists of persons working
for them under a contract of employment or otherwise
and having access to inside information relating, directly
or indirectly, to the issuer,
is a valuable measure for
protecting market integrity. These lists may serve issuers
or such persons to control the flow of such inside infor-
mation and thereby manage their confidentiality duties.
Moreover, these lists may also constitute a useful tool
for competent authorities when monitoring the applica-
tion of market abuse legislation. Identifying inside infor-
mation to which any insider has access and the date on

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which it gained access thereto is necessary for issuers
and competent authorities. Access to inside information
relating, directly or indirectly, to the issuer by persons
included on such a list is without prejudice to their duty
to refrain from insider dealing on the basis of any inside
information as defined in Directive 2003/6/EC.

HAS ADOPTED THIS DIRECTIVE:

(7)

(8)

(9)

The notification of transactions conducted by persons
discharging managerial responsibilities within an issuer
on their own account, or by persons closely associated
with them, is not only a valuable information for market
participants, but also constitutes an additional means for
competent authorities to supervise markets. The obliga-
tion by senior executives
is
without prejudice to their duty to refrain from insider
dealing on the basis of any inside information as defined
in Directive 2003/6/EC.

to notify transactions

Notification of
transactions should be in accordance
with the rules on transfer of personal data laid down in
Directive 95/46/EC (1) of the European Parliament and of
the Council of 24 October 1995 on the protection of
individuals with regard to the processing of personal
data and on the movement of such data.

Notification of suspicious transactions by persons profes-
instruments
sionally arranging transactions in financial
to the competent authority requires sufficient indications
that the transactions might constitute market abuse, i.e.
transactions which
for
suspecting that insider dealing or market manipulation is
involved. Certain transactions by themselves may seem
completely void of anything suspicious, but might
deliver such indications of possible market abuse, when
seen in perspective with other transactions, certain beha-
viour or other information.

reasonable

ground

give

(10)

the fundamental

This Directive respects
rights and
observes the principles recognised in particular by the
Charta of Fundamental Rights of the European Union
and in particular by Article 8 of the European Conven-
tion on Human Rights.

Article 1

Definitions

For the purpose of applying Article 6(10) of Directive 2003/6/
EC:

1.

‘Person discharging managerial responsibilities within an
issuer’ shall mean a person who is

(a) a member of the administrative, management or super-

visory bodies of the issuer:

(b) a senior executive, who is not a member of the bodies
as referred to in point (a), having regular access to inside
information relating, directly or indirectly, to the issuer,
and the power to make managerial decisions affecting
the future developments and business prospects of this
issuer.

2.

'Person closely associated with a person discharging
managerial
financial
instruments' shall mean:

responsibilities within an issuer of

(a) the spouse of the person discharging managerial respon-
sibilities, or any partner of that person considered by
national law as equivalent to the spouse;

(b) according to national

law, dependent children of the

person discharging managerial responsibilities;

(c) other relatives of

the person discharging managerial
responsibilities, who have shared the same household as
that person for at least one year on the date of the trans-
action concerned;

(d) any legal person, trust or partnership, whose managerial
responsibilities are discharged by a person referred to in
point 1 of this Article or in letters (a), (b) and (c) of this
point, or which is directly or indirectly controlled by
such a person, or that is set up for the benefit of such a
person, or whose economic interests are substantially
equivalent to those of such person.

3.

‘Person professionally arranging transactions’ shall mean at
least an investment firm or a credit institution.

(11)

The measures provided for in this Directive are in
accordance with the opinion of the European Securities
Committee,

4.

‘Investment
Article 1(2) of Council Directive 93/22/EEC (2);

firm’ shall mean any person as defined in

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

(2) OJ L 141, 11.6.1993, p. 27.

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5.

institution’ shall mean any person as defined in
‘Credit
Article 1(1) of Directive 2000/12/EC of the European Parlia-
ment and of the Council (1);

the relevant market practice against the main market para-
meters, such as the specific market conditions before carrying
out the relevant market practice, the weighted average price of
a single session or the daily closing price.

6.

‘Competent authority’ shall mean the competent authority
as defined in Article 1(7) of Directive 2003/6/EC.

Article 2

Factors to be taken into account when considering market
practices

1.
For the purposes of applying paragraph 2 of point 1 and
point 2(a) of Article 1 of Directive 2003/6/EC, Member States
shall ensure that the following non exhaustive factors are taken
into account by competent authorities, without prejudice to
collaboration with other authorities, when assessing whether
they can accept a particular market practice:

(a) the level of transparency of the relevant market practice to

the whole market;

(b) the need to safeguard the operation of market forces and
the proper interplay of the forces of supply and demand.;

(c) the degree to which the relevant market practice has an

impact on market liquidity and efficiency;

(d) the degree to which the relevant practice takes into account
the trading mechanism of the relevant market and enables
market participants to react properly and in a timely
manner to the new market situation created by that prac-
tice;

(e) the risk inherent in the relevant practice for the integrity
of, directly or indirectly, related markets, whether regulated
or not,
instrument within the
financial
whole Community;

in the relevant

(f) the outcome of any investigation of the relevant market
practice by any competent authority or other authority
mentioned in Article 12(1) of Directive 2003/6/EC, in par-
ticular whether the relevant market practice breached rules
or regulations designed to prevent market abuse, or codes
of conduct, be it on the market in question or on directly
or indirectly related markets within the Community;

(g) the

structural

characteristics of

relevant market
including whether it is regulated or not, the types of finan-
cial instruments traded and the type of market participants,
including the extent of retail investors participation in the
relevant market.

the

2. Member States shall ensure that practices,
in particular
new or emerging market practices are not assumed to be unac-
ceptable by the competent authority simply because they have
not been previously accepted by it.

3. Member States shall ensure that competent authorities
in
review regularly the market practices they have accepted,
particular taking into account significant changes to the rele-
vant market environment, such as changes to trading rules or
to market infrastructure.

Article 3

Consultation procedures and disclosure of decisions

1.
For the purposes of applying paragraph 2 of point 1 and
point 2(a) of Article 1 of Directive 2003/6/EC, Member States
shall ensure that the procedures set out in paragraphs 2 and 3
of this Article are observed by competent authorities when
considering whether to accept or continue to accept a particu-
lar market practice.

2. Without prejudice to Article 11(2) of Directive 2003/6/
EC, Member States shall ensure that competent authorities,
before accepting or not the market practice concerned, consult
representatives of
as appropriate relevant bodies
issuers, financial services providers, consumers, other authori-
ties and market operators.

such as

The consultation procedure shall include consultation of other
competent authorities, in particular where there exist compar-
able markets, i.e. in structures, volume, type of transactions.

3. Member States shall ensure that competent authorities
publicly disclose their decisions regarding the acceptability of
the market practice concerned, including appropriate descrip-
tions of such practices. Member States shall further ensure that
competent authorities transmit
their decisions as soon as
possible to the Committee of European Securities Regulators
which shall make them immediately available on its website.

Member States shall ensure that competent authorities shall,
when considering the need for safeguard referred to in point
(b) of the first subparagraph, in particular analyse the impact of

(1) OJ L 126, 26.5.2000, p. 1.

The disclosure shall include a description of the factors taken
into account in determining whether the relevant practice is
regarded as acceptable,
in particular where different conclu-
sions have been reached regarding the acceptability of the same
practice on different Member States markets.

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4. When investigatory actions on specific cases have already
started, the consultation procedures set out in paragraphs 1 to
3 may be delayed until the end of such investigation and
possible related sanctions.

5.
A market practice which was accepted following the
consultation procedures set out in paragraphs 1 to 3 shall not
be changed without using the same consultation procedures.

5. Member States shall ensure that the persons required to
draw up lists of insiders take the necessary measures to ensure
that any person on such a list that has access to inside informa-
tion acknowledges the legal and regulatory duties entailed and
is aware of the sanctions attaching to the misuse or improper
circulation of such information.

Article 4

Article 6

Inside

information

relation
in
commodities

to

derivatives

on

Managers' Transactions

For the purposes of applying the second paragraph of point 1
of Article 1 of Directive 2003/6/EC, users of markets on which
derivatives on commodities are traded, are deemed to expect to
receive information relating, directly or indirectly, to one or
more such derivatives which is:

(a) routinely made available to the users of those markets, or

(b) required to be disclosed in accordance with legal or regula-
tory provisions, market rules, contracts or customs on the
relevant underlying commodity market or commodity deri-
vatives market.

Article 5

Lists of insiders

For the purposes of applying the third subparagraph of
1.
Article 6(3) of Directive 2003/6/EC, Member States shall ensure
that lists of insiders include all persons covered by that Article
who have access to inside information relating, directly or
indirectly, to the issuer, whether on a regular or occasional
basis.

2.

Lists of insiders shall state at least:

1.
For the purposes of applying Article 6(4) of Directive
2003/6/EC, and without prejudice to the right of Member
States to provide for other notification obligations than those
covered by that Article, Member States shall ensure that all
transactions related to shares admitted to trading on a regulated
market, or to derivatives or other financial instruments linked
to them, conducted on the own account of persons referred to
in Article 1 points 1 and 2 above, are notified to the competent
authorities. The rules of notification to which those persons
have to comply with shall be those of the Member State where
the issuer is registered. The notification shall be made within
five working days of the transaction date to the competent
authority of that Member State. When the issuer is not regis-
tered in a Member State, this notification shall be made to the
competent authority of
is
required to file the annual information in relation to the shares
in accordance with Article 10 of Directive 2003/71/EC.

the Member State in which it

2. Member States may decide that, until the total amount of
transactions has reached five thousand Euros at the end of a
calendar year, no notification is required or notification may be
delayed until the 31 January of the following year. The total
amount of transactions shall be computed by summing up the
transactions conducted on the own account of persons referred
to in Article 1 point 1 with the transactions conducted on the
own account of persons referred to in Article 1 point 2.

(a) the identity of any person having access to inside informa-

3.

The notification shall contain the following information:

tion;

(b) the reason why any such person is on the list;

(c) the date at which the list of

insiders was created and

updated.

3.

Lists of insiders shall be promptly updated

(a) whenever there is a change in the reason why any person

is already on the list;

(b) whenever any new person has to be added to the list;

(c) by mentioning whether and when any person already on

the list has no longer access to inside information.

(a) name of the person discharging managerial responsibilities
within the issuer, or, where applicable, name of the person
closely associated with such a person,

(b) reason for responsibility to notify,

(c) name of the relevant issuer,

(d) description of the financial instrument,

(e) nature of the transaction (e.g. acquisition or disposal),

(f) date and place of the transaction

4. Member States shall ensure that lists of insiders will be
kept for at least five years after being drawn up or updated.

(g) price and volume of the transaction.

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Article 7

(e) any information which may have significance in reviewing

the suspicious transactions.

Suspicious transactions to be notified

in Commission Directive 2003/124/EC (1)

For the purposes of applying Article 6(9) of Directive 2003/6/
EC, Member States shall ensure that persons referred to in
Article 1 point 3 above shall decide on a case-by-case basis
whether there are reasonable grounds for suspecting that a
transaction involves insider dealing or market manipulation,
taking into account the elements constituting insider dealing or
market manipulation, referred to in Articles 1 to 5 of Directive
2003/6/EC,
imple-
menting Directive 2003/6/EC as regards the definition and
public disclosure of inside information and the definition of
this Directive.
market manipulation, and in Article 4 of
Without prejudice to Article 10 of Directive 2003/6/EC,
persons professionally arranging transactions shall be subject to
the rules of notification of the Member State in which they are
registered or have their head office, or in the case of a branch,
the Member State where the branch is situated. The notification
shall be addressed to the competent authority of this Member
State.

Member States shall ensure that competent authorities receiving
the notification of suspicious transactions transmit such infor-
mation immediately to the competent authorities of the regu-
lated markets concerned.

Article 8

Timeframe for notification

Member States shall ensure that in the event that persons, as
referred to in Article 1 point 3, become aware of a fact or
reasonable ground for
information that gives
suspicion
transaction, make a notification
relevant
concerning the
without delay.

Article 9

Content of notification

1. Member States shall ensure that persons subject to the
notification obligation transmit to the competent authority the
following information:

(a) description of the transactions, including the type of order
(such as limit order, market order or other characteristics of
the order) and the type of trading market (such as block
trade);

(b) reasons for suspicion that the transactions might constitute

market abuse;

(c) means for identification of the persons on behalf of whom
the transactions have been carried out, and of other
persons involved in the relevant transactions;

(d) capacity in which the person subject to the notification
obligation operates (such as for own account or on behalf
of third parties);

(1) OJ L 339, 24.12.2003, p. 70.

2. Where that information is not available at the time of
notification, the notification shall include at least the reasons
why the notifying persons suspect that the transactions might
constitute
insider dealing or market manipulation. All
remaining information shall be provided to the competent
authority as soon as it becomes available.

Article 10

Means of notification

Member States shall ensure that notification to the competent
authority can be done by mail, electronic mail, telecopy or tele-
phone, provided that in the latter case confirmation is notified
by any written form upon request by the competent authority.

Article 11

Liability and professional secrecy

1. Member States shall ensure that the person notifying to
the competent authority as referred to in Articles 7 to 10 shall
not inform any other person,
in particular the persons on
behalf of whom the transactions have been carried out or
parties related to those persons, of this notification, except by
virtue of provisions laid down by law. The fulfilment of this
requirement shall not involve the notifying person in liability
of any kind, providing the notifying person acts in good faith.

2. Member States shall ensure that competent authorities do
not disclose to any person the identity of the person having
notified these transactions,
if disclosure would, or would be
likely to harm the person having notified the transactions. This
provision is without prejudice to the requirements of the enfor-
cement and the sanctioning regimes under Directive 2003/6/EC
and to the rules on transfer of personal data laid down in
Directive 95/46/EC.

3.
The notification in good faith to the competent authority
as referred to in Articles 7 to 10 shall not constitute a breach
of any restriction on disclosure of information imposed by
contract or by any legislative, regulatory or administrative
provision, and shall not involve the person notifying in liability
of any kind related to such notification.

Article 12

Transposition

1. Member States shall bring into force the laws, regulations
and administrative provisions necessary to comply with this
Directive by 12 October 2004 at the latest. They shall forth-
with communicate to the Commission the text of the provi-
sions and a correlation table between those provisions and this
Directive.

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When Member States adopt those provisions, 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.

2. Member States shall communicate to the Commission the
text of the main provisions of national law which they adopt in
the field covered by this Directive.

Article 13

Entry into force

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

Article 14

Addressees

This Directive is addressed to the Member States.

Done at Brussels, 29 April 2004.

For the Commission

Frederik BOLKESTEIN

Member of the Commission