Proposal for a REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL on insider dealing and market manipulation (market abuse)
Date: 2011-10-20
Institutions: European Commission
Subjects: discriminatory price, financial institution, insider trading, restriction on competition, selective dissemination of information, stock-exchange transaction

EUROPEAN COMMISSION 

Brussels, 20.10.2011 
COM(2011) 651 final 

2011/0295 (COD) 

Proposal for a 

REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL 

on insider dealing and market manipulation (market abuse) 

(Text with EEA relevance) 

{SEC(2011) 1217 final} 
{SEC(2011) 1218 final} 

 
 
  
 
EXPLANATORY MEMORANDUM 

1. 

CONTEXT OF THE PROPOSAL 

Adopted in early 2003, the Market Abuse Directive (MAD) 2003/6/EC1 introduced a 
comprehensive  framework  to  tackle  insider  dealing  and  market  manipulation 
practices,  jointly  referred  to  as  "market  abuse".  The  Directive  aims  to  increase 
investor  confidence  and  market  integrity  by  prohibiting  those  who  possess  inside 
information  from  trading  in  related  financial  instruments,  and  by  prohibiting  the 
manipulation  of  markets  through  practices  such  as  spreading  false  information  or 
rumours and conducting trades which secure prices at abnormal levels. 

The  importance  of  market  integrity  has  been  highlighted  by  the  current  global 
economic and financial crisis. In this context, the Group of Twenty (G20) agreed to 
strengthen  financial  supervision  and  regulation  and  to  build  a  framework  of 
internationally agreed high standards. In line with the G20 findings, the report by the 
High-Level Group on Financial Supervision in  the  EU  recommended  that  "a  sound 
prudential  and  conduct  of  business  framework  for  the  financial  sector  must  rest  on 
strong supervisory and sanctioning regimes"2. 

In  its  Communication  on  "Ensuring  efficient,  safe  and  sound  derivatives  markets: 
Future  policy  actions"  the  Commission  undertook  to  extend  relevant  provisions  of 
the  MAD  in  order  to  cover  derivatives  markets  in  a  comprehensive  fashion3.  The 
importance  of  efficient  coverage  of  over  the  counter  (OTC)  transactions  in 
derivatives  has  been  stressed  also  in  discussions  at  various  international  fora 
including  the  G20  and  IOSCO  as  well  as  in  the  recent  US  Treasury  Financial 
Regulatory Reform programme. 

Furthermore, the Commission Communication on a Small Business Act for Europe 
calls on the Union and Member States to design rules according to the "think small 
first principle" by reducing administrative burdens, adapting legislation to the needs 
of  issuers,  whose  financial  instruments  are  admitted  to  trading  on  SME  growth 
markets, and facilitating the access to finance of those issuers4. A review of existing 
sanctioning  powers  and  their  practical  application  aimed  at  promoting  convergence 
of  sanctions  across  the  range  of  supervisory  activities  has  been  carried  out  in  the 
Commission Communication on sanctions in the financial services sector5. 

The  European  Commission  has  assessed  the  application  of  the  MAD  and  has 
identified  a  number  of  problems  which  have  negative  impacts  in  terms  of  market 
integrity  and  investor  protection,  lead  to  an  unlevel  playing  field  and  result  in 

1 
2 
3 

4 

5 

OJ L 16, 12.4.2003, p.16.  
Report of the High-Level Group on Financial Supervision in the EU, Brussels, 25.2.2009, p.23.  
European  Commission,  Communication  on  Ensuring  efficient,  safe  and  sound  derivatives  markets, 
COM (2009) 332, 3 July 2009.  
European  Commission,  Communication  on  Review  of  the  "Small  Business  Act"  for  Europe,  COM 
(2011) 78, 23 February 2011.  
European  Commission,  Communication  on  Reinforcing  sanctioning  regimes  in  the  financial  sector, 
COM (2010) 716, 8 December 2010. 

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compliance  costs  and  disincentives  for  issuers,  whose  financial  instruments  are 
admitted to trading on SME growth markets, to raise capital.  

As  a  result  of  regulatory,  market  and  technological  developments,  gaps  in  the 
regulation of new markets, platforms and over the counter instruments have emerged. 
Similarly, these same factors have led to gaps in the regulation of commodities and 
related derivatives. The fact that regulators lack certain information and powers, and 
that  sanctions  are  either  lacking  or  insufficiently  dissuasive,  mean  that  regulators 
cannot effectively enforce the Directive. Finally, the existence of numerous options 
and  discretions  in  the  MAD,  as  well  as  a  lack  of  clarity  on  certain  key  concepts, 
undermines the effectiveness of the Directive.  

In  light  of  these  problems,  this  initiative  aims  to  increase  market  integrity  and 
investor  protection,  while  ensuring  a  single  rulebook  and  level  playing  field  and 
increasing the attractiveness of securities markets for capital raising.  

2. 

RESULTS OF CONSULTATIONS WITH THE INTERESTED PARTIES AND 
IMPACT ASSESSMENTS 

The  initiative  is  the  result  of  extensive  consultations  with  all  major  stakeholders, 
including  public  authorities  (governments  and  securities  regulators),  issuers, 
intermediaries and investors.  

It  takes  into  consideration  the  reports  published  by  the  Committee  of  European 
Securities Regulators (CESR) on the nature and extent of the supervisory powers of 
Member States under the Market Abuse Directive6 and on the options and discretions 
of the MAD regime used by Member States7.  

It also takes into account a report by the European Securities Markets Expert Group 
(ESME)8  which  assesses  the  effectiveness  of  the  MAD  in  achieving  its  primary 
objectives,  identifies  certain  weaknesses  and  problems  and  sets  out  suggested 
improvements9.  

On  12  November  2008  the  European  Commission  held  a  public  conference  on  the 
review of the market abuse regime10. On 20 April 2009, the European Commission 
launched  a  call  for  evidence  on  the  review  of  the  Market  Abuse  Directive.  The 
Commission  services  received  85  contributions.  The  non-confidential  contributions 
can be consulted in the Commission website11.  

6 
7 
8 

9 

10 
11 

Ref. CESR/07-380, June 2007, available at www.cesr-eu.org.  
Ref. CESR/09-1120.  
ESME  is  an  advisory  body  to  the  Commission,  composed  of  securities  markets  practitioners  and 
experts,  whose  mandate  expired  at  the  end  of  2009  and  was  not  renewed.  It  was  established  by  the 
Commission in April 2006 and operated on the basis of the Commission Decision 2006/288/EC of 30 
March  2006  setting  up  a  European  Securities  Markets  Expert  Group  to  provide  legal  and  economic 
advice on the application of the EU securities Directives (OJ L 106, 19.4.2006, p. 14–17).  
Issued in June 2007 and entitled "market abuse EU legal framework and its implementation by Member 
States: a first evaluation".  
See http://ec.europa.eu/internal_market/securities/abuse/12112008_conference_en.htm. 
See http://ec.europa.eu/internal_market/consultations/2009/market_abuse_en.htm 

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On 28 June 2010 the Commission launched a public consultation on the revision of 
the Directive which closed on 23 July 201012. The Commission services received 96 
contributions.  The  non-confidential  contributions  can  be  consulted 
the 
Commission  website13.  A  summary  is  found  in  Annex  2  to  the  impact  assessment 
report14.  On  2  July  2010,  the  Commission  held  a  further  public  conference  on  the 
review of the Directive15.  

in 

In  line  with  its  "Better  Regulation"  policy,  the  Commission  conducted  an  impact 
assessment  of  policy  alternatives.  Policy  options  related  to  regulation  of  new 
markets,  platforms  and  OTC  instruments,  commodities  and  related  derivatives, 
sanctions,  powers  of  competent  authorities,  clarification  of  key  concepts  and 
reducing  administrative  burdens.  Each  policy  option  was  assessed  against  the 
following criteria: impact on stakeholders, effectiveness and efficiency. The overall 
impact of all the preferred policy options will lead to considerable improvements in 
addressing market abuse within the EU.  

First  of  all  market  integrity  and  investor  protection  will  be  improved  by  clarifying 
which  financial  instruments  and  markets  are  covered,  ensuring  that  instruments 
admitted to trading only on a multilateral trading facility (MTF) and other new types 
of organised trading facilities (OTFs) are covered. In addition the preferred options 
will  improve  protection  against  market  abuse  through  commodity  derivatives  by 
improved market transparency.  

In  addition  they  will  ensure  better  detection  of  market  abuse  by  offering  the 
necessary powers to competent authorities to perform investigations and improve the 
deterrence  of  sanctioning  regimes  by 
introducing  minimum  principles  for 
administrative  measures  or  sanctions.  The  proposal  for  a  Directive  [XX]  also 
requires the introduction of criminal sanctions.  

Furthermore, the preferred options will lead to a more coherent approach regarding 
market  abuse  by  reducing  options  and  discretions  for  member  States  and  will 
introduce  a  proportionate  regime  for  issuers,  whose  financial  instruments  are 
admitted to trading on SME growth markets.  

Overall,  the  preferred  policy  options  are  expected  to  contribute  to  the  improved 
integrity  of  financial  markets  which  will  have  a  positive  impact  on  investors' 
confidence  and  this  will  further  contribute  to  the  financial  stability  of  financial 
markets.  

DG MARKT services met the Impact Assessment Board on 23 February 2011. The 
Board  analysed  this  Impact  Assessment  and  delivered  its  opinion  on  25  February 
2011. During this meeting the members of the Board provided DG MARKT services 
with  comments  to  improve  the  content  of  the  Impact  Assessment  that  led  to  some 
modifications to the text. These are:  

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13 
14 
15 

See http://ec.europa.eu/internal_market/consultations/docs/2010/mad/consultation_paper.pdf 
See http://ec.europa.eu/internal_market/consultations/2010/mad_en.htm 
The impact assessment report can be found on XXX.  
See Annex 3 of the impact assessment report for a summary of the discussions.  

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– 

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Clarification  of  how  the  performance  of  the  existing  legislation  has  been 
evaluated  and  how  the  evaluation  results  have  informed  the  analysis  of  the 
problem; 

The  addition  of  evidence-based  estimates  of  the  overall  damage  to  the 
European economy as a consequence of abusive practices in the markets under 
consideration,  and  of  the  estimated  overall  benefits  of  the  preferred  policy 
options,  with  the  necessary  caveats  regarding  the  interpretation  of  these 
estimates; 

Clarification in the baseline scenario of how other related financial regulations 
complement the Market Abuse Directive; 

Clarification of the content of certain policy options and improved presentation 
of  the  packages  of  preferred  options,  as  well  as  an  assessment  of  the  overall 
impacts of the packages of preferred options, taking into account synergies or 
trade-offs between different options where they exist; 

A more proportionate analysis of the most costly measures in the assessment of 
the administrative burdens and costs; 

The addition in the main text of more clearly visible, concise summaries of the 
assessment  of  impacts  of  policy  options  in  terms  of  fundamental  rights, 
especially in the areas of investigative powers and sanctions; 

An  improved  justification  of  why  the  approximation  of  criminal  law  is 
essential  for  an  effective  EU  policy  on  market  abuse,  based  on  studies  and 
evidence from Member States about the effectiveness of criminal sanctions, as 
well  as  a  summary  of  the  responses  to  the  Commission  Communication  on 
reinforcing sanctioning regimes in the financial services sector; and 

A clearer presentation in the main text of the views of stakeholders, including 
institutional and individual investors, on the policy options. 

3. 

LEGAL ELEMENTS OF THE PROPOSAL 

3.1. 

Legal basis  

The  proposal  is  based  on  Article  114  TFEU  as  the  most  appropriate  basis  for  a 
Regulation in this field. A Regulation is considered to be the most appropriate legal 
instrument  to  define  the  market  abuse  framework  in  the  Union.  The  direct 
applicability  of  a  Regulation  will  reduce  regulatory  complexity  and  offer  greater 
legal  certainty  for  those  subject  to  the  legislation  across  the  Union  introducing  a 
harmonised set of core rules and contributing to the functioning of the Single Market.  

3.2. 

Subsidiarity and proportionality  

According to the principle of subsidiarity (Article 5.3 TFEU), action at Union level 
should  be  taken  only  when  the  aims  envisaged  cannot  be  achieved  sufficiently  by 
Member  States  alone  and  can  therefore,  by  reason  of  the  scale  or  effects  of  the 
proposed action, be better achieved by the Union. Although all the problems outlined 

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above  have  important  implications  for  each  individual  Member  State,  their  overall 
impact can only be fully perceived in a cross-border context. This is because market 
abuse  can  be  carried  out  wherever  that  instrument  is  listed,  or  over  the  counter,  so 
even  in  markets  other  than  the  primary  market  of  the  instrument  concerned. 
Therefore  there  is  a  real  risk  of  national  responses  to  market  abuse  being 
circumvented or ineffective in the absence of action at the Union level. 

Further, a consistent approach is essential in order to avoid regulatory arbitrage and 
since this issue is already covered by the acquis of the existing MAD addressing the 
problems  highlighted  above  can  best  be  achieved  in  a  common  effort.  Against  this 
background  the  Union  action  appears  appropriate  in  terms  of  the  principle  of 
subsidiarity. 

The  principle  of  proportionality  requires  that  any  intervention  is  targeted  and  does 
not go beyond what is necessary to achieve the objectives. This principle has guided 
the process from the identification and evaluation of alternative policy options to the 
drafting of this proposal.  

3.3. 

Compliance with Articles 290 and 291 TFEU 

On  23  September  2009,  the  Commission  adopted  proposals  for  Regulations 
establishing  EBA,  EIOPA,  and  ESMA16.  In  this  respect  the  Commission  wishes  to 
recall  the  Statements  in  relation  to  Articles  290  and  291  TFEU  it  made  at  the 
adoption  of  the  Regulations  establishing  the  European  Supervisory  Authorities 
according to which: "As regards the process for the adoption of regulatory standards, 
the  Commission  emphasises  the  unique  character  of  the  financial  services  sector, 
following from the Lamfalussy structure and explicitly recognised in Declaration 39 
to the TFEU. However, the Commission has serious doubts whether the restrictions 
on its role when adopting delegated acts and implementing measures are in line with 
Articles 290 and 291 TFEU." 

3.4. 

Detailed explanation of the proposal  

3.4.1.  Chapter I (General Provisions)  

3.4.1.1.  Regulation of new markets, trading facilities and OTC financial instruments  

The  MAD  is  based  on  the  concept  of  prohibiting  insider  dealing  or  market 
manipulation  in  financial  instruments  which  are  admitted  to  trading  on  a  regulated 
market.  However,  since  the  adoption  of  MiFID17,  financial  instruments  have  been 
increasingly  traded  on  MTFs,  on  other  types  of  OTFs,  such  as  swap  execution 
facilities or broker crossing systems, or only traded OTC. These new trading venues 
and facilities have provided more competition to existing regulated market, gaining 
an  increased  share  of  liquidity  and  attracting  a  broader  ranger  of  investors.  The 
increase in trading across different venues had made it more difficult to monitor for 
possible  market  abuse.  Therefore  the  Regulation  extends  the  scope  of  the  market 
abuse framework applying to any financial instrument admitted to trading on a MTF 

16 
17 

COM(2009) 501, COM(2009) 502, COM(2009) 503. 
Directive 2004/39/EC of the European Parliament and of the Council of 21 April 2004 on markets in 
financial instruments. OJ L 145, 30.4.2004.  

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or  an  OTF,  as  well  as  to  any  related  financial  instruments  traded  OTC  which  can 
have  an  effect  on  the  covered  underlying  market.  This  is  necessary  to  avoid  any 
regulatory arbitrage among trading venues, to ensure that the protection of investors 
and the integrity of markets are preserved on a level playing field in the entire Union, 
and  to  ensure  that  the  market  manipulation  of  such  financial  instruments  through 
derivatives traded OTC, such as CDS, is clearly prohibited.  

3.4.1.2.  Regulation of commodity derivatives and the related spot commodity contracts  

Spot  markets  and  related  derivative  markets  are  highly  interconnected  and  market 
abuse  may  take  place  across  these  markets.  This  raises  special  concerns  for  spot 
markets because the existing rules on transparency and market integrity only apply to 
financial and derivative markets and not to the related spot markets. The purpose of 
the Regulation is not to govern directly those spot markets. Indeed, any transaction or 
behaviour strictly within those non-financial markets should be outside the scope of 
this Regulation and be subject to specific and sectoral regulation and supervision as 
provided  for  in  the  field  of  energy  by  the  proposal  of  the  Commission  for  a 
Regulation  on  energy  market  integrity  and  transparency  (REMIT)18.  However,  the 
Regulation should cover the transactions or behaviours in those spot markets which 
are related to and have an effect on financial and derivative markets which are within 
its  scope.  In  particular,  under  the  current  MAD  the  lack  of  a  clear  and  binding 
definition  of  inside  information  in  relation  to  commodity  derivative  markets  may 
allow  information  asymmetries  in  connection  with  those  related  spot  markets.  This 
means  that,  under  the  current  market  abuse  framework,  investors  in  commodity 
derivatives  may  be  less  protected  than  investors  in  derivatives  of  financial  markets 
because a person could benefit from inside information in a spot market by trading 
on a related derivative market. For this reason the definition of inside information in 
relation  to  commodity  derivatives  should  be  aligned  to  the  general  definition  of 
inside information extending it to price sensitive information which is relevant to the 
related spot commodity contract as well as to the derivative itself. This will  ensure 
legal  certainty  and  better  information  for  investors.  Moreover,  the  MAD  only 
prohibits  any  manipulation  which  distorts  the  price  of  financial  instruments.  As 
certain  transactions  in  the  derivatives  markets  can  also  be  used  to  manipulate  the 
price of the related spot markets, and transactions in the spot markets can be used to 
manipulate  derivatives  markets,  the  definition  of  market  manipulation  should  be 
extended in the Regulation to also capture these types of cross-market manipulation. 
In  the  specific  case  of  wholesale  energy  products,  the  competent  authorities  and 
ESMA  shall  cooperate  with  ACER  and  the  national  regulatory  authorities  of  the 
Member States to ensure that a coordinated approach is taken to the enforcement of 
the relevant rules relating to financial instruments and wholesale energy products. In 
particular,  the  competent  authorities  should  take  into  account  the  specific 
characteristics  of  the  definitions  of  [Regulation  (EU)  No…of  the  European 
Parliament  and 
the  Council  on  Wholesale  Energy  Market  Integrity  and 
Transparency]  when  they  apply  the  definitions  of  the  inside  information,  insider 
dealing and market  manipulation of this Regulation to financial instruments related 
to wholesale energy products.  

18 

http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=COM:2010:0726:FIN:EN:PDF 

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3.4.1.3.  Market Manipulation through algorithmic and high frequency trading  

Financial  markets  are  experiencing  a  widespread  increase  in  the  use  of  automated 
trading methods such as algorithmic trading or high frequency trading. Such trading 
involves  computer  algorithms  deciding  on  whether  an  order  is  placed  and/or  on 
aspects of the execution of the order. A specific type of algorithmic trading is known 
as high frequency trading (HFT). HFT is typically not a strategy in itself but the use 
of  very  sophisticated  technology  to  implement  traditional  trading  strategies  such  as 
arbitrage and market making strategies. While most algorithmic and HFT strategies 
are  legitimate  there  are  particular  automated  strategies  that  have  been  identified  by 
regulators which, if carried out, are likely to constitute market abuse. For example, 
this includes strategies such as quote stuffing, layering and spoofing. The definition 
of market manipulation in the MAD is very broad and already capable of applying to 
abusive  behaviour  no  matter  what  medium  is  used  for  trading.  However,  it  is 
appropriate to specify further in the Regulation specific examples of strategies using 
algorithmic trading and high frequency trading that fall within the prohibition against 
market  manipulation.  Further  identifying  abusive  strategies  will  ensure  a  consistent 
approach in monitoring and enforcement by competent authorities.  

3.4.1.4.  Attempt at market manipulation  

As  the  MAD  does  not  cover  attempts  at  market  manipulation,  proving  market 
manipulation requires a regulator to demonstrate that either an order was placed or a 
transaction  was  executed.  However,  there  are  situations  where  a  person  takes  steps 
and  there  is  clear  evidence  of  an  intention  to  manipulate  the  market  but  either  an 
order  is  not  placed,  or  a  transaction  is  not  executed.  The  Regulation  expressly 
prohibits attempts at market manipulation, which will enhance market integrity. The 
existing  definition  of  insider  dealing  already  contained  elements  of  attempted 
behaviour. These will be removed and attempted insider dealing will be qualified as 
a separate offence. 

3.4.1.5.  Emission allowances 

Emission  allowances  will  be  reclassified  as  financial  instruments  as  part  of  the 
review of the Markets in Financial Instruments Directive. As a result, they will also 
fall into the scope of the market abuse framework. While most measures under the 
market abuse regime would apply without adaptation to the emission allowances, a 
few  provisions  will  need  to  be  adjusted  in  consideration  of  the  specific  nature  of 
these instruments and structural features of this market. In particular, unlike for most 
classes  of  financial  instruments,  inside  information  disclosure  as  well  as  duties 
related to insider lists and  managers transactions cannot be effectively addressed to 
the  issuer  of  emission  allowances  that  holds  responsibilities  for  development  and 
implementation  of  Union's  climate  policies.  The  public  authorities  in  charge 
(including 
to  ensure  fair  and  non-
discriminatory  disclosure  of  and  access  to  new  decisions,  developments  and  data. 
Moreover,  in  their  pursuit  of  Union's  climate  policy,  the  Member  States,  the 
European  Commission  as  well  as  other  officially  designated  bodies  should  not  be 
limited by the duties set by the market abuse regime.  

the  Commission)  are  anyhow  obliged 

Therefore,  a  specific  definition  of  inside  information  for  emission  allowances  is 
introduced.  The  obligation  to  disclose  inside  information  will  be  placed  on  the 

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participants  in  the  emission  allowance  market,  as  it  is  them  who  will  hold  the 
relevant  information  suitable  for  ad-hoc  or  periodic  disclosure.  A  threshold 
(expressed in terms of emissions or thermal input or a combination thereof) defined 
in a delegated act would remove from the scope of the obligation under Art. 12 (and 
also Articles 13 and 14) all those entities, the activity of which on an individual basis 
may  have  no  material  impact  on  the  price  formation  of  emission  allowances  or  the 
(consequential) risks of insider dealing.  

Finally,  due  to  classification  of  emission  allowances  as  financial  instruments  under 
the MiFID it is possible to put all market abuse measures concerning the auctioning 
of  emission  allowances  in  a  single  rulebook  and  jointly  with  the  general  regime 
against market abuse for the secondary market.  

3.4.2.  Chapter II (Insider Dealing and Market Manipulation)  

3.4.2.1.  Inside information 

Inside information can be abused before an issuer is under the obligation to disclose 
it.  The  state  of  contract  negotiations,  terms  provisionally  agreed  in  contract 
negotiations,  the  possibility  of  the  placement  of  financial  instruments,  conditions 
under  which  financial  instruments  will  be  marketed,  or  provisional  terms  for  the 
placement  of  financial  instruments  may  be  relevant  information  for  investors. 
Therefore,  such  information  should  qualify  as  inside  information.  However,  such 
information may not be sufficiently precise for the issuer to be under an obligation to 
disclose it. In such cases, the prohibition against insider dealing should apply, but the 
obligation on the issuer to disclose the information should not. 

3.4.2.2.  Level  playing  field  among  trading  venues  and  facilities  in  the  prevention  and 

detection of market abuse  

The increasing trading of instruments across different venues makes it more difficult 
to  monitor  for  possible  market  abuse.  According  to  the  MiFID,  MTFs  can  be 
operated  by  market  operators  or  investment  firms.  The  monitoring  obligations  in 
Article 26 of the MiFID apply to them alike. However, the obligation in Article 6 of 
the  MAD  to  adopt  structural  provisions  aimed  at  preventing  and  detecting  market 
manipulation  practices  only  applies  to  market  operators.  The  Regulation  aims  to 
ensure a level playing field among all trading venues and facilities within its scope 
by  requiring  them  to  adopt  the  necessary  structural  provisions  aimed  at  preventing 
and detecting market manipulation practices.  

3.4.3.  Chapter III (Disclosure Requirements)  

3.4.3.1.  Public disclosure of inside information  

3.4.3.2.  Article  6(1)  of  the  MAD  requires  that  issuers  of  financial  instruments  inform  the 
public  as  soon  as  possible  of  inside  information  which  directly  concerns  those 
issuers. Paragraph 2 allows those issuers under specific conditions to delay the public 
disclosure.  Under  the  Regulation,  issuers  will  be  required  to  inform  the  competent 
authorities of their decision to delay the disclosure of inside information immediately 
after such a disclosure is made. The responsibility for assessing whether such delay 
is  justified  remains  with  the  issuer.  The  possibility  for  the  competent  authorities 

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where  appropriate  to  investigate  ex  post  whether  in  fact  the  specific  conditions  for 
the delay were met will increase investor protection and market integrity. However, 
if inside information is of systemic importance and it is in the public interest to delay 
its publication, the competent authorities will have the power to permit such a delay 
for  a  limited  period  in  the  wider  public  interest  of  maintaining  the  stability  of  the 
financial  system  and  avoiding  the  losses  which  could  result  for  example  from  the 
failure of a systemically important issuer. Insiders' lists  

Insiders'  lists  are  an  important  tool  for  competent  authorities  when  investigating 
possible market abuse. The Regulation aims to eliminate national differences which 
have imposed so far unnecessary administrative burdens on issuers, by providing that 
the precise data to be included in such lists should be defined in delegated acts and 
implementing technical standards adopted by the Commission.  

3.4.3.3.  Disclosure  requirements  for  issuers  whose  financial  instruments  are  admitted  to 

trading on SME growth markets  

Without  prejudice  to  the  objectives  of  preserving  the  integrity  and  transparency  of 
financial markets and of protecting investors, the market abuse framework is adapted 
to the characteristics and needs of issuers, whose financial instruments are admitted 
to  trading  on  SME  growth  markets.  Applying  the  new  market  abuse  framework  of 
the Regulation in an undifferentiated manner to all SME growth markets may deter 
issuers on those markets from raising capital on the capital markets. The scope and 
size of the business of those issuers is more restricted and the events giving rise to 
the need to disclose inside information are typically more limited than those of larger 
issuers.  The  Regulation  requires  those  issuers  to  disclose  inside  information  in  a 
modified  and  simplified  market-specific  way.  Such  inside  information  may  be 
published  by  those  SME  growth  markets,  on  behalf  of  those  issuers,  in  accordance 
with a standardised content and format defined in implementing technical standards 
adopted by the Commission. Those issuers are also exempt, under certain conditions, 
from the obligation to keep and constantly update insiders' lists, and benefit from the 
new threshold for the reporting of manager's transactions mentioned below.  

3.4.3.4.  Reporting of manager's transactions  

The  Regulation  clarifies  the  scope  of  the  reporting  obligations  in  relation  to 
manager's  transactions.  These  reports  serve  important  purposes  by  deterring 
managers from insider trading and providing useful information to the market about 
the  manager's  view  on  the  price  movements  of  the  shares  of  the  issuers.  The 
Regulation  clarifies  that  any  transaction  made  by  a  person  exercising  discretion  on 
behalf of a manager of an issuer or whereby the manager pledges or lends his shares 
must  also  be  reported  to  the  competent  authorities  and  be  made  accessible  to  the 
public. Moreover, it introduces a threshold of EUR 20 000, uniform in all Member 
States, which triggers the obligation to report such manager's transactions.  

3.4.4.  Chapter IV (ESMA and Competent Authorities)  

3.4.4.1.  Powers of Competent Authorities  

Under Article 12(2)(b) of the MAD, competent authorities have the power to demand 
information  from  any  person.  However,  there  is  an  information  gap  for  spot 

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commodity markets, where there are no transparency rules or reporting obligations to 
sectoral  regulators,  when  they  exist.  The  power  to  request  information  from  any 
person  typically  allows  competent  authorities  access  to  all  information  needed  to 
investigate  suspicions  of  possible  market  abuse.  But  this  information  may  not  be 
sufficient  in  particular  if  there  is  no  sectoral  authority  to  supervise  these  spot 
commodity  markets.  The  Regulation  allows  competent  authorities  access  to 
continuous data by requiring such data to be directly submitted to them in a specified 
format.  By  gaining  access  to  spot  commodity  market  traders'  systems,  competent 
authorities are also able to monitor real-time data flows.  

For the purpose of detecting cases of insider dealing and market manipulation, it is 
necessary for competent authorities to have the possibility to have access to private 
premises  and  seize  documents.  The  access  to  private  premises  is  necessary  in 
particular where: (i) the person to whom a demand for information has already been 
made  fails  (wholly  or  in  part)  to  comply  with  it;  or  (ii)  where  there  are  reasonable 
grounds  for  believing  that  if  a  demand  were  to  be  made,  it  would  not  be  complied 
with,  or  that  the  documents  or  information  to  which  the  information  requirement 
relates,  would  be  removed,  tampered  with  or  destroyed.  While  currently  all 
jurisdictions provide for access to any document, not all competent authorities have 
the power to enter private premises and seize documents. As a result, the risk exists 
that competent authorities in such cases are deprived from important and necessary 
evidence,  and  accordingly,  cases  of  insider  dealing  and  market  manipulation  might 
remain undetected and unsanctioned. In this context, it is important to point out that 
such access to private premises might constitute an interference with the fundamental 
rights to private and family life as recognized respectively by Article 7 of the Charter 
of  Fundamental  Rights  of  the  European  Union.  It  is  essential  that  any  limitation 
thereof be fully compatible with Article 52 of the Charter. Therefore, the competent 
authority of a Member State should have the power to enter private premises in order 
to  seize  documents  only  after  having  obtained  prior  authorisation  from  the  judicial 
authority  of  that  Member  State  concerned  in  accordance  with  national  law,  and 
where  a  reasonable  suspicion  exists  that  documents  related  to  the  subject-matter  of 
the  inspection  may  be  relevant  to  prove  a  case  of  insider  dealing  or  market 
manipulation  in  violation  of  this  Regulation  or  Directive  [new  MAD].  The 
prohibitions  against  insider  dealing  and  market  manipulation  apply  to  all  persons. 
Therefore, the competent authorities need to have access to information held, not just 
by  investment  firms, but by those persons themselves and to information regarding 
those  persons'  behaviour  held  in  databases  by  non-financial  companies.  Existing 
telephone and data traffic records from investment firms executing transactions, and 
existing  telephone  and  data  traffic  records  from  telecom  operators  constitute 
important  evidence  to  detect  and  prove  the existence  of  insider  dealing  and  market 
manipulation.  Telephone  and  data  traffic  records  may  establish  the  identity  of  a 
person  responsible  for  the  dissemination  or  false  or  misleading  information.  Most 
forms of insider dealing or market manipulation involve the actions of two or more 
people, transferring information or coordinating their activities. Telephone and data 
traffic  records  may  establish  that  a  relationship  exists  between  a  person  who  has 
access  to  inside  information  and  the  suspicious  trading  activity  of  another,  or  to 
establish a link between two persons' collusive trading activity. In particular, access 
to telephone and data traffic records from telecom operators is considered among the 

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most important issues for the accomplishment of the investigatory and enforcement 
tasks of CESR members.19 Indeed, access to telephone and data traffic records held 
by telecom operators is an important and sometimes even the sole piece of evidence 
to establish whether inside information has been transferred from a primary insider to 
someone trading with this inside information. For example, this data would represent 
evidence  in  a  case  where  a  board  member  of  a  company  in  possession  of  inside 
information  transfers  inside  information  by  phone  to  a  friend,  relative  or  family 
member  who  afterwards  executes  a  suspicious  transaction  based  on  the  inside 
information received. The telephone and data traffic records from telecom operators 
could  be  used  by  the  regulator  to  demonstrate  that  a  call  had  been  placed  by  the 
primary insider to their friend or relative shortly before that person then called their 
broker  to  instruct  them  to  make  a  suspicious  transaction.  The  telephone  and  data 
traffic records from telecom operators would provide evidence of a link which could 
be used as evidence to sanction the case which otherwise would  never be detected. 
Another  example  is  a  case  where  a  false  or  misleading  message  is  posted  on  an 
internet  bulletin  board  to  affect  the  price  of  a  financial  instrument.  Telephone  and 
data traffic records can serve to identify the author of the message. In addition, such 
records  can  provide  evidence  of  a  link  with  another  person  who  made  prior  or 
subsequent  suspicious  transactions  in  order  to  prove  market  manipulation  by  the 
dissemination  of  false  or  misleading  information.  In  this  context,  it  is  important  to 
introduce  a  level  playing  field  in  the  internal  market  in  relation  to  the  access  by 
competent  authorities  to  telephone  and  existing  data  traffic  records  held  by  a 
telecommunication  operator  or  by  an  investment  firm.  Therefore,  competent 
authorities  should  be  able  to  require  existing  telephone  and  existing  data  traffic 
records  held  by  a  telecommunication  operator  or  by  an  investment  firm,  where  a 
reasonable  suspicion  exists  that  such  records  related  to  the  subject-matter  of  the 
inspection  may  be  relevant  to  prove  insider  dealing  or  market  manipulation  as 
defined  in  this  Regulation  or  in  the  [new  MAD].  It  should  also  be  clear  that  these 
records shall however not concern the content of the communication to which they 
relate.  

As  market  abuse  can  take  place  across  borders  and  different  markets,  ESMA  has  a 
strong  coordination  role  and  competent  authorities  are  required  to  cooperate  and 
exchange  information  with  other  competent  authorities  and,  when  applicable  to 
commodity  derivatives,  with  the  regulatory  authorities  responsible  for  the  related 
spot markets, within the Union and in third countries. 

3.4.5.  Chapter V (Administrative sanctions) 

3.4.5.1.  Sanctions 

Financial  markets  are  increasingly  integrated  in  the  Union  and  offenses  can  have 
cross-borders  effects  in  the  Union.  The  existing  divergent  sanctioning  regimes 
among Member States foster regulatory arbitrage and impair the ultimate objectives 
of market integrity and transparency within the Single Market for financial services. 
A  stocktaking  of  the  national  regimes  in  place  has,  for  example,  revealed  that  the 
levels  of  pecuniary  sanctions  vary  widely  among  Member  States,  that  some 

19 

CESR answer to the call for evidence on the review of the MAD, of 20 April 2009, available at 
http://ec.europa.eu/internal_market/securities/abuse/index_en.htm 

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this  Regulation 

competent  authorities  do  not  have  certain  important  sanctioning  powers  at  their 
disposal and that some competent authorities cannot address sanctions at natural and 
legal  persons.20  Therefore, 
introduces  minimum  rules  for 
administrative  measures,  sanctions  and  fines.  This  does  not  prevent  individual 
Member  States  from  fixing  higher  standards.  The  Regulation  provides  for  the 
disgorgement  of  any  profits  where  identified,  including  interests,  and,  in  order  to 
ensure  an  appropriate  deterrent  effect,  it  introduces  fines  which  must  exceed  any 
profit gained or loss avoided as a result of the violation of this Regulation, and must 
be determined by the competent authorities in light of the facts and circumstances. 

Moreover,  criminal  sanctions  have  a  stronger  deterrent  effect  than  administrative 
measures  and  sanctions.  The  proposal  for  a  Directive  [XX]  introduces  the 
requirement  for  all  Member  States  to  put  in  place  effective,  proportionate  and 
dissuasive  criminal  sanctions  for  the  most  serious  insider  dealing  and  market 
manipulation  offences.  That  Directive  is  to  be  applied  taking  into  account  the 
provisions  established  in  this  Regulation,  including  prospective  implementing 
measures. However, the definitions used for the purposes of the Directive may differ 
from the ones used for the purposes of this Regulation. 

3.4.5.2.  Protection and incentives for whistleblowers 

Whistle  blowing  can  be  a  useful  source  of  primary  information  and  may  alert 
competent authorities to cases of suspected market abuse. The Regulation enhances 
the  market  abuse  framework  in  the  Union  introducing  appropriate  protection  for 
whistleblowers  reporting  suspected  market  abuse,  the  possibility  of  financial 
incentives  for  persons  who  provide  competent  authorities  with  salient  information 
that  leads  to  a  monetary  sanction,  and  enhancements  of  Member  States'  provisions 
for receiving and reviewing whistleblowing notifications. 

4. 

BUDGETARY IMPLICATION  

The specific budget implications of the proposal relate to task allocated to ESMA as 
specified in the legislative financial statements accompanying this proposal. Specific 
budgetary  implications  for  the  Commission  are  also  assessed  in  the  financial 
statement accompanying this proposal. 

The proposal has implications for the Community budget. 

20 

(COM  (2010)  1496)  Communication  from  the  Commission  to  the  European  Parliament,  the  Council, 
the  European  Economic  and  Social  Committee  and  the  Committee  of  the  Regions  reinforcing 
sanctioning regimes in the financial services sector, December 2010, Chapter 3.  

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13 

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2011/0295 (COD) 

Proposal for a 

REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL 

on insider dealing and market manipulation (market abuse) 

(Text with EEA relevance) 

THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE EUROPEAN UNION, 

Having  regard  to  the  Treaty  on  the  Functioning  of  the  European  Union,  and  in  particular 
Article 114 thereof, 

Having regard to the proposal from the European Commission21, 

After transmission of the draft legislative act to the national Parliaments, 

Having regard to the opinion of the European Economic and Social Committee22, 

Having regard to the opinion of the European Central Bank23, 

Having regards to the opinion of the European Data Protection Supervisor, 

Acting in accordance with the ordinary legislative procedure, 

Whereas: 

(1) 

(2) 

(3) 

A genuine single market for financial services is crucial for economic growth and job 
creation in the Union. 

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

Directive 2003/6/EC24 of the European Parliament and the Council on insider dealing 
and market manipulation (market abuse), adopted on 28 January 2003, completed and 
updated the Union's legal framework to protect market integrity. However, given the 
legislative,  market  and  technological  developments  since  then  that  have  resulted  in 
considerable changes to the financial landscape, that Directive should now be replaced 

21 
22 
23 
24 

OJ C […], […], p. […]. 
OJ C , , p. . 
OJ C , , p. . 
OJ L 16, 12.4.2003, p.16.  

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(4) 

(5) 

(6) 

to ensure that it keeps pace with these developments. A new legislative instrument is 
also needed to ensure uniform rules and clarity of key concepts and to ensure a single 
rulebook  in  line  with  the  conclusions  of  the  High  Level  Group  on  Financial 
Supervision25. 

There is a need to establish a uniform framework in order to preserve market integrity 
and to avoid potential regulatory arbitrage as well as to provide more legal certainty 
and  less  regulatory  complexity  for  market  participants.  This  directly  applicable  legal 
act  aims  at  contributing  in  a  determining  manner  to  the  smooth  functioning  of  the 
internal  market  and  should,  consequently,  be  based  on  the  provisions  of  Article  114 
TFEU, as interpreted in accordance with the consistent case-law of the Court of Justice 
of the European Union. 

In  order  to  remove  the  remaining  obstacles  to  trade  and  significant  distortions  of 
competition  resulting  from  divergences  between  national  laws  and  to  prevent  any 
further likely obstacles to trade and significant distortions of competition from arising, 
it is therefore necessary to adopt a Regulation establishing uniform rules applicable in 
all  Member  States.  Shaping  market  abuse  requirements  in  the  form  of  a  Regulation 
should ensure that those requirements will be directly applicable. This should ensure 
uniform  conditions  by  preventing  diverging  national  requirements  as  a  result  of  the 
transposition of  a  directive. This Regulation  should  entail that  all  persons follow the 
same  rules  in  all  the  Union.  A  Regulation  should  also  reduce  regulatory  complexity 
and firms' compliance costs, especially for firms operating on a cross-border basis, and 
contribute to eliminating competitive distortions. 

The Commission Communication on "A Small Business Act for Europe"26 calls on the 
Union and its Member States to design rules in order to reduce administrative burdens, 
to  adapt  legislation  to  the  needs  of  issuers  on  markets  for  small  and  medium  sized 
enterprises  and  to  facilitate  the  access  to  finance  of  those  issuers.  A  number  of 
provisions in Directive 2003/6/EC impose administrative burdens on issuers, notably 
those  whose  financial  instruments  are  admitted  to  trading  on  SME  growth  markets, 
that should be reduced.  

(7)  Market abuse is the concept that encompasses all unlawful behaviour in the financial 
markets and for the purposes of this Regulation it should be understood to consist of 
insider  dealing  or  the  misuse  of  inside  information  and  market  manipulation.  Such 
behaviours  prevent  full  and  proper  market  transparency,  which  is  a  pre  requisite  for 
trading for all economic actors in integrated financial markets.  

(8) 

The  scope  of  Directive  2003/6/EC  focused  on  financial  instruments  admitted  to 
trading  on  regulated  markets  but  in  recent  years  financial  instruments  have  been 
increasingly  traded  on  multilateral  trading  facilities  (MTFs).  There  are  also  financial 
instruments which are only traded on other types of organised trading facilities (OTFs) 
such  as  broker  crossing  systems  or  only  traded  over  the  counter.  The  scope  of  this 
Regulation should therefore be extended to include any financial instrument traded on 
a MTF or an OTF, as well as financial instruments traded over the counter, such as for 

25 
26 

Report of the High-Level Group on Financial Supervision in the EU, Brussels, 25.2.2009. 
Commission  Communication  ‘Think  Small  First’  -  A  ‘Small  Business  Act’  for  Europe,  COM(2008) 
394 final. 

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15 

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example credit default swaps, or any other conduct or action which can have an effect 
on such a financial instrument traded on a regulated market, MTF or OTF. This should 
improve investor protection, preserve the integrity of markets and ensure that market 
manipulation  of  such  instruments  through  financial  instruments  traded  over  the 
counter is clearly prohibited.  

(9) 

Stabilisation  of  financial  instruments  or  trading  in  own  shares  in  buy-back 
programmes  can  be  legitimate,  in  certain  circumstances,  for  economic  reasons  and 
should not, therefore, in themselves be regarded as market abuse. 

(10)  Member  States  and  the  European  System  of  Central  Banks,  the  European  Financial 
Stability Facility, national central banks and other agencies or special purpose vehicles 
of one or several Member States as well as the Union and certain other public bodies 
should  not  be  restricted  in  carrying  out  monetary,  exchange-rate  or  public  debt 
management or climate policy.  

(11)  Reasonable investors base their investment decisions on information already available 
to  them,  that  is  to  say,  on  ex  ante  available  information.  Therefore,  the  question 
whether,  in  making  an  investment  decision,  a  reasonable  investor  would  be  likely  to 
take into account a particular piece of information should be appraised on the basis of 
the  ex  ante  available  information.  Such  an  assessment  has  to  take  into  consideration 
the anticipated impact of the information in light of the totality of the related issuer's 
activity,  the  reliability  of  the  source  of  information  and  any  other  market  variables 
likely to affect the financial instruments, the related spot commodity contracts, or the 
auctioned products based on the emission allowances in the given circumstances. 

(12)  Ex  post  information  may  be  used  to  check  the  presumption  that  the  ex  ante 
information was price sensitive, but should not be used to take action against persons 
who drew reasonable conclusions from ex ante information available to them. 

(13)  Legal certainty for market participants should be enhanced through a closer definition 
of  two  of  the  elements  essential  to  the  definition  of  inside  information,  namely  the 
precise  nature  of  that  information  and  the  significance  of  its  potential  effect  on  the 
prices  of  the  financial  instruments,  the  related  spot  commodity  contracts,  or  the 
auctioned  products  based  on  the  emission  allowances.  For  derivatives  which  are 
wholesale energy products, notably information required to be disclosed according to 
Regulation  [Regulation  (EU)  No…of  the  European  Parliament  and  the  Council  on 
Wholesale Energy Market Integrity and Transparency] should be considered as inside 
information. 

(14) 

Inside information can be abused before an issuer is under the obligation to disclose it. 
The state of contract negotiations, terms provisionally agreed in contract negotiations, 
the  possibility  of  the  placement  of  financial  instruments,  conditions  under  which 
financial  instruments  will  be  marketed,  or  provisional  terms  for  the  placement  of 
financial  instruments  may  be  relevant  information  for  investors.  Therefore,  such 
information should qualify as inside information. However, such information may not 
be  sufficiently  precise  for  the  issuer  to  be under  an  obligation  to  disclose  it.  In  such 
cases,  the  prohibition  against  insider  dealing  should  apply,  but  the  obligation  on  the 
issuer to disclose the information should not. 

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(15)  Spot markets and related derivative markets are highly interconnected and global, and 
market abuse may take place across markets as well as across borders. This is true for 
both insider dealing and market manipulation. In particular, inside information from a 
spot market can benefit a person trading on a financial market. Therefore, the general 
definition  of  inside  information  in  relation  to  financial  markets  and  commodity 
derivatives  should  also  apply  to  all  information  which  is  relevant  to  the  related 
commodity.  Moreover,  manipulative  strategies  can  also  extend  across  spot  and 
derivatives  markets.  Trading 
including  commodity 
derivatives,  can  be  used  to  manipulate  related  spot  commodity  contracts  and  spot 
commodity  contracts  can  be  used  to  manipulate  related  financial  instruments.  The 
prohibition of market manipulation should capture these interlinkages. However, it is 
not appropriate or practicable to extend the scope of the Regulation to behaviour that 
does  not  involve  financial  instruments,  for  example,  to  trading  in  spot  commodity 
contracts  that  only  affects  the  spot  market.  In  the  specific  case  of  wholesale  energy 
products, the competent authorities should take into account the specific characteristics 
of  the  definitions  of  [Regulation  (EU)  No…of  the  European  Parliament  and  the 
Council  on  Wholesale  Energy  Market  Integrity  and  Transparency]  when  they  apply 
the  definitions  of  the  inside  information,  insider  dealing  and  market  manipulation  of 
this Regulation to financial instruments related to wholesale energy products.  

in  financial 

instruments, 

(16)  As a consequence of the classification of emission allowances as financial instruments 
as  part  of  the  review  of  the  Markets  in  Financial  Instruments  Directive,  those 
instruments  will  also  come  within  the  scope  of  this  Regulation.  Bearing  in  mind  the 
specific nature of those instruments and structural features of the carbon market, it is 
necessary to ensure that the activity of Member States, the European Commission and 
other  officially  designated  bodies  involving  emission  allowances  is  not  restricted  in 
the  pursuit  of  the  Union's  climate  policy.  Moreover,  the  duty  to  disclose  inside 
information  needs  to  be  addressed  to  the  participants  in  that  market  in  general. 
Nevertheless, in order to avoid exposing the market to reporting that is not useful and 
as well as to maintain cost-efficiency of the measure foreseen, it appears necessary to 
limit  the  regulatory  impact  of  that  duty  to  only  those  EU  ETS  operators,  that  –  by 
virtue  of  their  size  and  activity  –  can  reasonably  be  expected  to  be  able  to  have  a 
significant  effect  on  the  price  of  emission  allowances.  Where  emission  allowance 
market  participants  already  comply  with  equivalent  inside  information  disclosure 
duties,  notably  pursuant  to  Regulation  on  energy  market  integrity  and  transparency 
(Regulation  (EU)  No…of  the  European  Parliament  and  the  Council  on  Wholesale 
Energy  Market  Integrity  and  Transparency),  the  obligation  to  disclose  inside 
information  concerning  emission  allowances  should  not  lead  to  the  duplication  of 
mandatory disclosures with substantially the same content.  

(17)  Commission  Regulation  (EU)  No  1031/2010  of  12  November  2010  on  the  timing, 
administration and other aspects of auctioning of greenhouse gas emission allowances 
pursuant  to  Directive  2003/87/EC  of  the  European  Parliament  and  the  Council 
establishing  a  scheme  for  greenhouse  gas  emission  allowances  trading  within  the 
Community27  provided  for  two  parallel  market  abuse  regimes  applicable  to  the 

27 

Commission Regulation (EU) No 1031/2010 of 12 November 2010. on the timing, administration and 
other aspects of auctioning of greenhouse gas emission allowances pursuant to Directive 2003/87/EC of 
the European Parliament and the Council establishing a scheme for greenhouse gas emission allowances 
trading within the Community, OJ L 302, 18.11.2010, p. 1. 

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auctions  of  emission  allowances.  However,  as  a  consequence  of  the  classification  of 
emission  allowances  as  financial  instruments,  this  Regulation  should  constitute  a 
single rulebook of market abuse measures applicable to the entirety of the primary and 
secondary  market  in  emission  allowances.  The  Regulation  shall  also  apply  to  the 
auctioning of emission allowances or other auctioned products based thereon pursuant 
to  Commission  Regulation  No  1031/2010  of  12  November  2010  on  the  timing, 
administration and other aspects of auctioning of greenhouse gas emission allowances 
pursuant  to  Directive  2003/87/EC  of  the  European  Parliament  and  the  Council 
establishing  a  scheme  for  greenhouse  gas  emission  allowances  trading  within  the 
Community 

(18)  This  Regulation  should  provide  measures  regarding  market  manipulation  that  are 
capable  of  being  adapted  to  new  forms  of  trading  or  new  strategies  that  may  be 
abusive.  To  reflect  the  fact  that  trading  of  financial  instruments  is  increasingly 
automated,  it  is  desirable  that  market  manipulation  should  be  supplemented  by 
examples of specific abusive strategies that may be carried out by algorithmic trading 
including  high  frequency  trading.  The  examples  provided  are  neither  intended  to  be 
exhaustive  nor  are  they  intended  to  suggest  that  the  same  strategies  carried  out  by 
other means would not also be abusive.  

(19) 

In order to complement the prohibition of market manipulation, this Regulation should 
include a prohibition against attempting to engage in market manipulation, given that 
failed  attempts  to  manipulate  the  market  should  also  be  sanctioned.  The  attempt  to 
engage  in  market  manipulation  should  be  distinguished  from  situations  where 
behaviour does not have the desired effect on the price of a financial instrument. Such 
behaviour is considered to be market manipulation because it was likely to give false 
or misleading signals. 

(20)  This  Regulation  should  also  clarify  that  engaging  in  market  manipulation  or 
attempting  to  engage  in  market  manipulation  in  a  financial  instrument  may  take  the 
form  of  using  related  financial  instruments  such  as  derivative  instruments  that  are 
traded on another trading venue or over the counter.  

(21) 

In  order  to  ensure  uniform  market  conditions  between  trading  venues  and  facilities 
subject to this Regulation, operators of regulated markets, MTFs and OTFs should be 
required to adopt proportionate structural provisions aimed at preventing and detecting 
market manipulation practices.  

(22)  Manipulation  or  attempted  manipulation  of  financial  instruments  may  also  consist  in 
placing  orders  which  may  not  be  executed.  Further,  a  financial  instrument  may  be 
manipulated  through  behaviour  which  occurs  outside  a  trading  venue.  Therefore, 
persons  who  professionally  arrange  or  execute  transactions  and  are  required  to  have 
systems  in  place  to  detect  and  report  suspicious  transactions  should  also  report 
suspicious orders and suspicious transactions that take place outside a trading venue.  

(23)  Manipulation  or  attempted  manipulation  of  financial  instruments  may  also  consist  in 
disseminating  false  or  misleading  information.  The  spreading  of  false  or  misleading 
information  can  have  a  significant  impact  on  the  prices  of  financial  instruments  in  a 
relatively  short  period  of  time.  It  may  consist  in  the  invention  of  manifestly  false 
information,  but  also  the  wilful  omission  of  material  facts,  as  well  as  the  knowingly 
inaccurate reporting of information. This form of market manipulation is particularly 

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harmful  to  investors,  because  it  causes  them  to  base  their  investment  decisions  on 
incorrect or distorted information. It is also harmful to issuers, because it reduces the 
trust  in  the  available  information  related  to  them.  A  lack  of  market  trust  can  in  turn 
jeopardise an issuer's ability to issue new financial instruments or to secure credit from 
other  market  participants  in  order  to  finance  its  operations.  Information  spreads 
through the market place very quickly. As a result, the harm to investors and issuers 
may  persist  for  a  relatively  long-time  until  the  information  is  found  to  be  false  or 
misleading,  and  can  be  corrected  by  the  issuer  or  those  responsible  for  its 
dissemination. It is therefore necessary to qualify the spreading of false or misleading 
information, including rumours and false or misleading news, as being a breach of this 
Regulation. It is therefore appropriate not to allow those active in the financial markets 
to freely express information contrary to their own opinion or better judgement, which 
they know or should know to be false or misleading, to the detriment of investors and 
issuers. 

(24)  The prompt public disclosure of inside information by an issuer is essential to avoid 
insider  trading  and  ensure  that  investors  are  not  mislead.  Issuers  should  therefore  be 
required to inform the public as soon as possible of inside information, unless a delay 
would  not  be  likely  to  mislead  the  public  and  the  issuer  is  able  to  ensure  the 
confidentiality of the information.  

(25)  At  times,  where  a  financial  institution  is  receiving  emergency  lending  assistance,  it 
may be in the best interest of financial stability for the disclosure of inside information 
to be delayed when the information is of systemic importance. It should therefore be 
possible  for  the  competent  authority  to  authorise  a  delay  in  the  disclosure  of  inside 
information.  

(26)  The requirement to disclose inside information can be burdensome for issuers, whose 
financial instruments are admitted to trading on SME growth markets, given the costs 
of monitoring information in their possession and seeking legal advice about whether 
and when information needs to be disclosed. Nevertheless, prompt disclosure of inside 
information is essential to ensure investor confidence in those issuers. Therefore, the 
European Securities and Markets Authority (ESMA) should be able to issue guidelines 
which  assist  issuers  to  comply  with  the  obligation  to  disclose  inside  information 
without compromising investor protection.  

(27) 

Insider  lists  are  an  important  tool  for  regulators  when  investigating  possible  market 
abuse, but national differences in regards to data to be included in those lists impose 
unnecessary  administrative  burdens  on  issuers.  Data  fields  required  for  insider  lists 
should  therefore  be  uniform  in  order  to  reduce  those  costs.  The  requirement  to  keep 
and  constantly  update  insider  lists  imposes  administrative  burdens  specifically  on 
issuers  on  SME  growth  markets.  As  competent  authorities  are  able  to  exercise 
effective market abuse supervision without having those lists available at all times for 
those  issuers  they  should  be  exempt  from  this  obligation  in  order  to  reduce  the 
administrative costs imposed by this Regulation.  

(28)  Greater  transparency  of  transactions  conducted  by  persons  discharging  managerial 
responsibilities  at  the  issuer  level  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.  It  is  necessary  to  clarify  that  the  obligation  to  publish 

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those  managers'  transactions  also  includes  the  pledging  or  lending  of  financial 
instruments  and  also  transactions  by  another  person  exercising  discretion  for  the 
manager. In order to ensure an appropriate balance between the level of transparency 
and the number of reports notified to competent authorities and the public, a uniform 
threshold should be introduced in this Regulation below which transactions shall not 
be notified.  

(29)  A set of effective tools and powers for the competent authority of each Member State 
guarantees  supervisory  effectiveness.  Market  undertakings  and  all  economic  actors 
should  also  contribute  to  market  integrity.  In  this  sense,  the  designation  of  a  single 
competent  authority  for  market  abuse  should  not  exclude  collaboration  links  or 
delegation under the responsibility of the competent authority, between that authority 
and  market  undertakings  with  a  view  to  guaranteeing  efficient  supervision  of 
compliance with the provisions in this Regulation.  

(30)  For  the  purpose  of  detecting  cases  of  insider  dealing  and  market  manipulation,  it  is 
necessary  for  competent  authorities  to  have  the  possibility  to  have  access  to  private 
premises  and  seize  documents.  The  access  to  private  premises  is  necessary  in 
particular where: the person to whom a demand for information has already been made 
fails (wholly or in part) to comply with it; or where there are reasonable grounds for 
believing that if a demand were to be made, it would not be complied with, or that the 
documents  or  information  to  which  the  information  requirement  relates,  would  be 
removed, tampered with or destroyed. 

(31)  Existing  telephone  and  data  traffic  records  from  investment  firms  executing 
transactions,  and  existing  telephone  and  data  traffic  records  from  telecom  operators 
constitute crucial, and sometimes the only, evidence to detect and prove the existence 
of  insider  dealing  and  market  manipulation.  Telephone  and  data  traffic  records  may 
establish  the  identity  of  a  person  responsible  for  the  dissemination  of  false  or 
misleading information, that persons have been in contact at a certain time, and that a 
relationship exists between two or more people. In order to introduce a level playing 
field in the Union in relation to the access by competent authorities to telephone and 
existing data traffic records held by a telecommunication operator or by an investment 
firm,  competent  authorities  should  be  able  to  require  existing  telephone  and  existing 
data  traffic  records  held  by  a  telecommunication  operator  or  by  an  investment  firm, 
where a reasonable suspicion exists that such records related to the subject-matter of 
the  inspection  may  be  relevant  to  prove  insider  dealing  or  market  manipulation  as 
defined  in  [new  MAD]  in  violation  of  this  Regulation  or  Directive  [new  MAD]. 
Telephone and data traffic records do not encompass the content of such records.  

(32)  Since market abuse can take place across borders and markets, competent authorities 
should be required to cooperate  and  exchange  information with other competent and 
regulatory  authorities,  and  with  ESMA,  in  particular  in  relation  to  investigation 
activities. Where a competent authority is convinced that market abuse is being, or has 
been, carried out in another Member State or affecting financial instruments traded in 
another Member State, it should notify that fact to the competent authority and ESMA. 
In  cases  of  market  abuse  with  cross-border  effects,  ESMA  should  be  required  to 
coordinate the investigation if requested to do so by one of the competent authorities 
concerned.  

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(33) 

In  order  to  ensure  exchanges  of  information  and  cooperation  with  third  country 
authorities  in  relation  to  the  effective  enforcement  of  this  Regulation,  competent 
authorities should conclude cooperation arrangements with their counterparts in third 
countries. Any transfer of personal data carried out on the basis of those agreements 
shall  comply  with  Directive  (EC)  95/46/EC  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  free  movement  of  such  data28  and  with 
Regulation  (EC)  No  45/2001  of  the  European  Parliament  and  of  the  Council  of  18 
December  2000  on  the  protection  of  individuals  with  regard  to  the  processing  of 
personal data by the Community institutions and bodies and on the free movement of 
such data29. 

(34)  A sound prudential and conduct of business framework for the financial sector should 
rest  on  strong  supervisory  and  sanctioning  regimes.  To  this  end,  supervisory 
authorities should be equipped with sufficient powers to act and should be able to rely 
on  equal,  strong  and  deterrent  sanctions  regimes  against  all  financial  misconduct, 
sanctions  which  should  be  enforced  effectively.  However,  the  High  Level  Group 
considered  that  none  of  these  elements  is  currently  in  place.  A  review  of  existing 
sanctioning powers and their practical application aimed at promoting convergence of 
sanctions  across  the  range  of  supervisory  activities  has  been  carried  out  in  the 
Commission Communication of 8 December 2010 on reinforcing sanctioning regimes 
in the financial sector30. 

(35)  Therefore, as well as providing regulators with effective supervisory tools and powers, 
a set of administrative measures, sanctions and fines should be laid down to ensure a 
common  approach  in  Member  States  and  to  enhance  their  deterrent  effect. 
Administrative fines should take into account factors such as the disgorgement of any 
identified financial benefit, the gravity and duration of the breach, any aggravating or 
mitigating factors, the need for fines to have a deterrent effect and, where appropriate, 
include  a  discount  for  cooperation  with  the  competent  authority.  The  adoption  and 
publication of sanctions should respect fundamental rights as laid down in the Charter 
of  Fundamental  Rights  of  the  European  Union,  in  particular  the  right  to  respect  for 
private and family life (Article 7), the right to the protection of personal data (Article 
8) and the right to an effective remedy and to a fair trial (Article 47). 

(36)  Whistleblowers bring new information to the attention of competent authorities which 
assists  them  in  detecting  and  sanctioning  cases  of  insider  dealing  and  market 
manipulation. However, whistleblowing may be deterred for fear of retaliation, or for 
lack of incentives. This Regulation should therefore ensure that adequate arrangements 
are  in  place  to  encourage  whistleblowers  to  alert  competent  authorities  to  possible 
breaches  of  this  Regulation  and  to  protect  them  from  retaliation.  However, 
whistleblowers should only be eligible for those incentives where they bring to light 
new  information  which  they  are  not  already  legally  obliged  to  notify  and  where  this 
information results in a sanction for a breach of this Regulation. Member States should 
also  ensure  that  whistleblowing  schemes  they  implement  include  mechanisms  that 

28 
29 
30 

OJ L 281, 23.11.1995, p. 31. 
OJ L 8, 12.1.2001, p. 1. 
European  Commission,  Communication  on  Reinforcing  sanctioning  regimes  in  the  financial  sector, 
COM (2010) 716, 8 December 2010. 

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provide appropriate protection of a reported person, particularly with regard the right 
to the protection of his personal data and procedures to ensure the right of the reported 
person of defence and to be heard before the adoption of a decision concerning him as 
well as the right to seek effective remedy before a court against a decision concerning 
him 

(37)  Since Member States have adopted legislation implementing Directive 2003/6/EC, and 
since delegated acts and implementing technical standards are foreseen which should 
be  adopted  before  the  framework  to  be  introduced  can  be  usefully  applied,  it  is 
necessary to defer the application of the substantive provisions of this Regulation for a 
sufficient period of time. 

(38) 

In  order  to  facilitate  a  smooth  transition  to  the  entry  into  application  of  this 
Regulation, market practices existing before the entry into force of this Regulation and 
accepted  by  competent  authorities  in  accordance  with  Commission  Regulation  (EC) 
No  2273/2003  of  22  December  2003  implementing  Directive  2003/6/EC  of  the 
European  Parliament  and  of  the  Council  as  regards  exemptions  for  buy-back 
programmes  and  stabilisation  of  financial  instruments31  for  the  purpose  of  applying 
point 2(a) of Article 1 of Directive 2003/6/EC, may remain applicable until one year 
after the date specified for effective application of this Regulation provided that they 
are notified to ESMA. 

(39)  This Regulation respects the fundamental rights and observes the principles recognised 
in  the  Charter  of  Fundamental  Rights  of  the  European  Union  as  enshrined  in  the 
Treaty,  notably  the  right  to  respect  for  private  and  family  life,  the  right  to  the 
protection of personal data, the freedom of expression and information, the freedom to 
conduct a business, the right to an effective remedy and to a fair trial, the presumption 
of  innocence  and  right  of  defence,  the  principles  of  legality  and  proportionality  of 
criminal offences and penalties, and the right not to be tried or punished twice for the 
same offence. Limitations placed on these rights are in accordance with article 52(1) 
of  the  Charter  as  they  are  necessary  to  ensure  the  general  interest  objectives  of  the 
protection  of  investors  and  the  integrity  of  financial  markets,  and  appropriate 
safeguards are provided to ensure that rights are limited only to the extent necessary to 
meet  these  objectives  and  by  measures  that  are  proportionate  to  the  objective  to  be 
met.  In  particular,  reporting  of  suspicious  transactions  is  necessary  to  ensure  that 
competent  authorities  may  detect  and  sanction  market  abuse.  Prohibiting  attempts  to 
engage  in  market  manipulation  is  necessary  to  enable  competent  authorities  to 
sanction  such  attempts  where  they  have  evidence  of  intent  to  commit  market 
manipulation, even in the absence of an identifiable effect on market prices. Access to 
data and telephone records is necessary to provide evidence and investigative leads on 
possible  insider  dealing  or  market  manipulation,  and  therefore  for  the  detection  and 
sanctioning  of  market  abuse.  The  conditions  imposed  by  this  Regulation  ensure 
compliance  with  fundamental  rights.  Measures  on  whistleblowing  are  necessary  to 
facilitate  the  detection  of  market  abuse  and  to  ensure  the  protection  of  the 
whistleblower and of the reported person, including the protection of their private life, 
personal  data,  and  the  right  to  be  heard  and  to  an  effective  remedy  before  a  court. 
Introducing common minimum rules for administrative measures, sanctions and fines 
is  necessary  to  ensure  that  comparable  market  abuse  breaches  are  sanctioned  in  a 

31 

OJ L 336, 23.12.2003, p. 33. 

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comparable way and to ensure that sanctions imposed are proportionate to the breach. 
This  Regulation  does  not  in  any  way  prevent  Member  States  from  applying  their 
constitutional rules relating to freedom of the press and freedom of expression in the 
media. 

(40)  Directive 95/46 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 
free  movement  of  such  data32  and  Regulation  (EU)  No  45/2001  of  the  European 
Parliament and of the Council of 18 December 2000 on the protection of individuals 
with regard to the processing of personal data by the EU institutions and bodies and on 
the free movement of such data33, govern the processing of personal data carried out 
by  ESMA  within  the  framework  of  this  Regulation  and  under  the  supervision  of  the 
Member States competent authorities, in particular the public independent authorities 
designated  by  the  Member  States.  Any  exchange  or  transmission  of  information  by 
competent  authorities  should  be  in  accordance  with  the  rules  on  the  transfer  of 
personal data as laid down in Directive 95/46/EC. And any exchange or transmission 
of  information  by  ESMA  should  be  in  accordance  with  the  rules  on  the  transfer  of 
personal data as laid down in Regulation (EC) No 45/2001. 

(41)  This  Regulation,  as  well  as  the  delegated  acts,  standards  and  guidelines  adopted  in 
accordance  with  it,  are  without  prejudice  to  the  application  of  the  Union  rules  on 
competition. 

(42)  The  Commission  should  be  empowered  to  adopt  delegated  acts  in  accordance  with 
Article 290 of the Treaty. In particular, delegated acts should be adopted in respect of 
the conditions for buy-back programmes and stabilisation of financial instruments, the 
indicators for manipulative behaviour listed in Annex 1, the threshold for determining 
the  application  of  the  public  disclosure  obligation  to  emission  allowance  market 
participants,  the  conditions  for  drawing  up  insider  lists  and  the  threshold  and 
conditions  relating  to  managers'  transactions.  It  is  of  particular  importance  that  the 
Commission carry out appropriate consultations during its preparatory work, including 
at  expert  level.  The  Commission,  when  preparing  and  drawing-up  delegated  acts, 
should  ensure  a  simultaneous,  timely  and  appropriate  transmission  of  relevant 
documents to the European Parliament and Council. 

(43) 

In  order  to  ensure  uniform  conditions  for  the  implementation  of  this  Regulation  in 
respect of procedures for the reporting of violations of this Regulation implementing 
powers should be conferred on the Commission. Those powers should be exercised in 
accordance with Regulation (EU) No 183/2011 of the European Parliament and of the 
Council of 16 February 2011 laying down the rules and general principles concerning 
mechanisms  for  control  by  the  Member  States  of  the  Commission's  exercise  of 
implementing powers. 

(44)  Technical standards in financial services should ensure uniform conditions across the 
Union  in  matters  covered  by  this  Regulation.  As  a  body  with  highly  specialised 
expertise, it would be efficient and appropriate to entrust ESMA, with the elaboration 

32 
33 

OJ L 281, 23.11.1995, p. 31. 
OJ L 8, 12.1.2001, p. 1. 

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of draft regulatory and implementing technical standards which do not involve policy 
choices, for submission to the Commission. 

(45)  The  Commission  should  adopt  the  draft  regulatory  technical  standards  developed  by 
ESMA  in  relation  to  procedures  and  arrangements  for  trading  venues  aimed  at 
preventing  and  detecting  market  abuse  and  of  systems  and  templates  to  be  used  by 
persons in order to detect and notify suspicious orders and transactions and in respect 
of  technical  arrangements  for  categories  of  persons  for  objective  presentation  of 
information  recommending  an  investment  strategy  and  for  disclosure  of  particular 
interests or indications of conflicts of interest by means of delegated acts pursuant to 
Article  290  TFEU  and  in  accordance  with  Articles  10  to  14  of  Regulation  (EU)  No 
1093/2010.  It  is  of  particular  importance  that  the  Commission  carry  out  appropriate 
consultations during its preparatory work, including at expert level. 

(46)  The  Commission  should  also  be  empowered  to  adopt  implementing  technical 
standards  by  means  of  implementing  acts  pursuant  to  Article  291  TFEU  and  in 
accordance  with  Article  15  of  Regulation  (EU)  No  1093/2010.  ESMA  should  be 
entrusted  with  drafting  implementing  technical  standards  for  submission  to  the 
Commission with regard to public disclosure of inside information, formats of insider 
lists  and  formats  and procedures for  the cooperation and exchange of information of 
competent authorities among themselves and with ESMA. 

(47)  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 Union level, the Union may adopt measures, in accordance with 
the principle of subsidiarity as set out in Article 5 of the Treaty on European Union. In 
accordance  with  the  principle  of  proportionality,  as  set  out  in  that  Article,  this 
Regulation does not go beyond what is necessary in order to achieve that objective. 

(48)  The  provisions  of  Directive  2003/6/EC  being  no  longer  relevant  and  sufficient,  that 
Directive  should  be  repealed  from  [24  months  after  entry  into  force  of  this 
Regulation].The requirements and prohibitions of this Regulation are strictly related to 
those  in the MiFD,  therefore  they should enter in to application on the date of entry 
into application of the MiFID review. 

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HAVE ADOPTED THIS REGULATION: 

CHAPTER I 
GENERAL PROVISIONS 

SECTION 1 

SUBJECT MATTER AND SCOPE 

Article 1 
Subject matter 

This Regulation establishes  a  common  regulatory  framework  on  market  abuse  to  ensure  the 
integrity of financial markets in the Union and to enhance investor protection and confidence 
in those markets. 

1. 

This Regulation applies to the following: 

Article 2 
Scope 

(a) 

(b) 

financial instruments admitted to trading on a regulated market or for which a 
request for admission to trading on a regulated market has been made; 

financial instruments traded on a MTF or on an OTF  in  at  least one Member 
State; 

(c)  behaviour or transactions relating to a financial instrument referred to in points 
(a)  or  (b)  irrespective  of  whether  or  not  the  behaviour  or  transaction  actually 
takes place on a regulated market, MTF or OTF; 

(d)  behaviour or transactions, including bids, relating to the auctioning of emission 
allowances or other auctioned products based thereon pursuant to Commission 
Regulation  No  1031/2010.34  Without  prejudice  to  any  specific  provisions 
referring to bids submitted in the context of an auction, any requirements and 
prohibitions in this Regulation referring to orders to  trade shall apply to such 
bids.  

Articles 7 and 9 also apply to the acquisition or disposal of financial instruments not 
referred to in points (a) and (b) of paragraph 1 but whose value relates to a financial 

Commission Regulation (EU) No 1031/2010 of 12 November 2010. on the timing, administration and 
other aspects of auctioning of greenhouse gas emission allowances pursuant to Directive 2003/87/EC of 
the European Parliament and the Council establishing a scheme for greenhouse gas emission allowances 
trading within the Community, OJ L 302, 18.11.2010, p. 1. 

2. 

34 

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instrument referred to in that paragraph. This notably includes derivative instruments 
for the transfer of credit risk that relate to a financial instrument referred to paragraph 
1 and financial contracts for differences that relate to such a financial instrument. 

3. 

Articles  8  and  10  also  apply  to  transactions,  orders  to  trade  or  other  behaviour 
relating to: 

(a) 

(b) 

(c) 

types  of  financial  instruments,  including  derivative  contracts  or  derivative 
instruments  for  the  transfer  of  credit  risk  where  the  transaction,  order  or 
behaviour  has  or  is  likely  or  intended  to  have  an  effect  on  a  financial 
instrument referred to in points (a) and (b) of paragraph 1;  

spot commodity contracts, which are not wholesale energy products, where the 
transaction, order or behaviour has or is likely or intended to have an effect on 
a financial instrument referred to in points (a) and (b) of paragraph 1; or 

types  of  financial  instruments,  including  derivative  contracts  or  derivative 
instruments  for  the  transfer  of  credit  risk  where  the  transaction,  order  or 
behaviour  has  or  is  likely  or  intended  to  have  an  effect  on  spot  commodity 
contracts. 

4. 

The  prohibitions  and  requirements  in  this  Regulation  shall  apply  to  actions  carried 
out  in  the  Union  or  outside  the  Union  concerning  instruments  referred  to  in 
paragraphs 1 to 3. 

SECTION 2 

EXCLUSION FROM THE SCOPE 

Article 3 
Exemption for buy-back programmes and stabilisation 

1. 

2. 

3. 

The  prohibitions  in  Articles  9  and  10  of  this  Regulation  do  not  apply  to  trading  in 
own  shares  in  buy-back  programmes  when  the  full  details  of  the  programme  are 
disclosed  prior  to  the  start  of  trading,  trades  are  reported  as  being  part  of  the  buy-
back programme to the competent authority and subsequently disclosed to the public, 
and adequate limits with regards to price and volume are respected. 

The prohibitions in Articles 9 and 10 of this Regulation do not apply to trading in own 
shares for the stabilisation of a financial instrument when stabilisation is carried out 
for  a  limited  time  period,  when  relevant  information  about  the  stabilisation  is 
disclosed, and adequate limits with regards to price are respected. 

The  Commission  shall  adopt,  by  means  of  delegated acts in accordance with Article 
31, measures specifying the conditions such buy-back programmes and stabilisation 
measures referred to in paragraphs 1 and 2 need to adhere to, including conditions for 
trading, restrictions regarding time and volume, disclosure and reporting obligations, 
and price conditions. 

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Article 4 
Exclusion for monetary and public debt management activities and climate policy activities 

1. 

This  Regulation  does  not  apply  to  transactions,  orders  or  behaviours  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  of  a 
Member State, by any other ministry, agency or special purpose vehicle of a Member 
State, or by any person acting on their behalf and, in the case of a Member State that 
is a federal state, to such transactions, orders or behaviours carried out by a member 
making  up  the  federation.  It  shall  also  not  apply  to  such  transactions,  orders  or 
behaviours carried out by the Union, a special purpose vehicle for several Member 
States,  the  European  Investment  Bank,  an  international  financial  institution 
established  by  two  or  more  Member  States,  which  has  the  purpose  to  mobilise 
funding  and  provide  financial  assistance  to  the  benefit  of  its  members  that  are 
experiencing or threatened by severe financing problems or the European Financial 
Stability Facility. 

2. 

This  Regulation  does  not  apply  to  the  activity  of  a  Member  State,  the  European 
Commission or any other officially designated body, or of any person acting on their 
behalf, which concerns emission allowances and which is undertaken in the pursuit 
of the Union's climate policy. 

SECTION 3 

DEFINITIONS 

Article 5 
Definitions 

For the purposes of this Regulation, the following definitions apply: 

1. 

2. 

3. 

4. 

5. 

6. 

"financial instrument" means any instrument within the meaning of Article 2(1)(8) of 
Regulation [MiFIR]. 

"regulated market" means a multilateral system in the Union within the meaning of 
Article 2(1)(5) of Regulation[MiFIR]. 

"multilateral  Trading  Facility  (MTF)"  means  a  multilateral  system  in  the  Union 
within the meaning of Article 2(1)(6) of Regulation[MiFIR]. 

"organised Trading Facility (OTF)" means a system or facility in the Union referred 
to in Article 2(1)(7) of Regulation[MiFIR]. 

"trading  venue"  means  a  system  or  facility  in  the  Union  referred  to  in  Article 
2(1)(26) of Regulation[MiFIR]. 

"SME  growth  market"  means  a  MTF  in  the  Union  within  the  meaning  of  Article 
4(1)(17) of Directive [new MiFID]. 

EN 

27 

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7. 

8. 

9. 

10. 

11. 

12. 

13. 

"competent authority" means the competent authority designated in accordance with 
Article 16. 

"person" means any natural or legal person. 

"commodity" means a commodity within the meaning of Article 2(1) of Commission 
Regulation (EC) No 1287/200635.  

"spot commodity contract" means any contract for the supply of a commodity traded 
on  a  spot  market  which  is  promptly  delivered  when  the  transaction  is  settled 
including any derivative contract that must be settled physically.  

"spot market" means any commodity market in which commodities are sold for cash 
and promptly delivered when the transaction is settled.  

"buy-back programme" means trading in own shares in accordance with Articles 19 
to 24 of Council Directive 77/91/EEC36.  

"algorithmic  trading"  means  trading  of  financial  instruments  using  computer 
algorithms within the meaning of Article 4(1)(37) of Directive [new MiFID].  

14. 

"emission allowance" means a financial instrument as defined in point (11) of Section 

C of Annex I of Directive [new MiFID]. 

15. 

16. 

17. 

18. 

35 

36 

37 

38 

39 

"emission  allowance  market  participant"  means  any  person  who  enters  into 
transactions, including the placing of orders to trade, in emission allowances. 

"issuer  of  a  financial  instrument"  means  an  issuer  as  defined  in  Article  2(1)(h)  of 
Directive 2003/71/EC37.  

"ACER"  means  the  Agency  for  the  Cooperation  of  Energy  Regulators  established 
under Regulation (EC) No. 713/200938. 

"wholesale energy product" has the same meaning as in Article 2(4) of [Regulation 
(EU) No…of the European Parliament and the Council on Wholesale Energy Market 
Integrity and Transparency]39.  

Commission Regulation (EC) No 1287/2006 of 10 August 2006 implementing Directive 2004/39/EC of 
the European Parliament and of the Council as regards record-keeping obligations for investment firms, 
transaction  reporting,  market  transparency,  admission  of  financial  instruments  to  trading,  and  defined 
terms for the purposes of that Directive. [OJ L 241, 2.9.2006, p. 1]. 
Second Council Directive 77/91/EEC of 13 December 1976 on coordination of safeguards which, for 
the  protection  of  the  interests  of  members  and  others,  are  required  by  Member  States  of  companies 
within the meaning of the second paragraph of Article 58 of the Treaty, in respect of the formation of 
public  limited  liability  companies  and  the  maintenance  and  alteration  of  their  capital,  with  a  view  to 
making such safeguards equivalent. [OJ L 26, 31.1.1977, p. 1]. 
Directive  2003/71/EC  of  the  European  Parliament  and  of  the  Council  of  4  November  2003  on  the 
prospectus  to  be  published  when  securities  are  offered  to  the  public  or  admitted  to  trading  and 
amending Directive 2001/34/EC. OJ L 345, 31.12.2003, p. 64. 
Regulation  (EC)  No  713/2009  of  the  European  Parliament  and  of  the  Council  of  13  July  2009 
establishing an Agency for the Cooperation of Energy Regulators. OJ L 211, 14.8.2009, p.1.  
Regulation  (EU)  No…of  the  European  Parliament  and  the  Council  on  Wholesale  Energy  Market 
Integrity and Transparency 

EN 

28 

   EN 

 
                                                 
19. 

"national  regulatory  authority"  has  the  same  meaning  as  in  Article  2(7)  of 
[Regulation  (EU)  No…of  the  European  Parliament  and  the  Council  on  Wholesale 
Energy Market Integrity and Transparency]40.  

SECTION 4 

INSIDE INFORMATION, INSIDER DEALING AND MARKET MANIPULATION 

Article 6 
Inside information 

1. 

For the purposes of this Regulation, inside information shall comprise the following 
types of information:  

(a) 

(b) 

(c) 

(d) 

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,  information  of  a  precise  nature, 
which has not been made public, relating, directly or indirectly, to one or more 
such  derivatives  or  to  the  related  spot  commodity  contract,  and  which,  if  it 
were made public, would be likely to have a significant effect on the prices of 
such  derivatives  or  related  spot  commodity  contracts;  notably  information 
which  is  required  to  be  disclosed  in  accordance  with  legal  or  regulatory 
provisions at the Union or national level, market rules, contracts or customs, on 
the relevant commodity derivatives or spot markets. 

in  relation  to  emission  allowances  or  auctioned  products  based  thereon, 
information  of  a  precise  nature,  which  has  not  been  made  public,  relating, 
directly  or  indirectly,  to  one  or  more  such  instruments,  and  which,  if  it  were 
made public, would be likely to have a significant effect on the prices of such 
instruments or on the prices of related derivative financial instruments. 

for  persons  charged  with  the  execution  of  orders  concerning  financial 
instruments, it also means information conveyed by a client and related to the 
client's  pending  orders  in  financial  instruments,  which  is  of  a  precise  nature, 
which  relates,  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, the price of related spot commodity contracts, or on the 
price of related derivative financial instruments. 

40 

Regulation  (EU)  No…of  the  European  Parliament  and  the  Council  on  Wholesale  Energy  Market 
Integrity and Transparency 

EN 

29 

   EN 

 
                                                 
(e) 

information not falling within paragraphs (a), (b), (c) or (d) relating to one or 
more issuers of financial instruments or to one or more financial instruments, 
which is not generally available to the public, but which, if it were available to 
a  reasonable  investor,  who  regularly  deals  on  the  market  and  in  the  financial 
instrument or a related spot commodity contract concerned, would be regarded 
by that person as relevant when deciding the terms on which transactions in the 
financial instrument or a related spot commodity contract should be effected. 

For  the  purposes  of  applying  paragraph  1,  information  shall  be  deemed  to  be  of  a 
precise nature if it indicates a set of circumstances which exists or may reasonably be 
expected to come into existence or an event which has occurred or may reasonably 
be expected to do so and if it is specific enough to enable a conclusion to be drawn as 
to  the  possible  effect  of  that  set  of  circumstances  or  event  on  the  prices  of  the 
financial  instruments,  the  related  spot  commodity  contracts,  or  the  auctioned 
products based on the emission allowances. 

For the purposes of applying paragraph 1, information which, if it were made public, 
would be likely to have a significant effect on the prices of the financial instruments, 
the  related  spot  commodity  contracts,  or  the  auctioned  products  based  on  the 
emission allowances shall mean information a reasonable investor would be likely to 
use as part of the basis of his investment decisions. 

Article 7 
Insider dealing and improper disclosure of inside information  

For the purposes of this Regulation, insider dealings arises where a person possesses 
inside  information  and  uses  that  information  by  acquiring  or  disposing  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 use of inside information to cancel 
or amend an order concerning a financial instrument to which the information relates 
where  the  order  was  placed  before  the  person  concerned  possessed  the  inside 
information, shall also be considered as insider dealing. 

For  the  purposes  of  this  Regulation,  attempting  to  engage  in  insider  dealing  arises 
where  a  person  possesses  inside  information  and  attempts  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  attempt  to  cancel  or 
amend an order concerning a financial instrument to which the information relates on 
the  basis  of  inside  information  where  the  order  was  placed  before  the  person 
concerned  possessed  the  inside  information,  shall  also  be  considered  an  attempt  to 
engage in insider dealing. 

For the purposes of this Regulation, a person recommends or induces another person 
to  engage  in  insider  dealing  if  the  person  possesses  inside  information  and 
recommends or induces another person, on the basis of inside information, to acquire 
or dispose of financial instruments to which that information relates. 

For the purposes of the Regulation, improper disclosure of inside information arises 
where a person possesses inside information and discloses the inside information to 

2. 

3. 

1. 

2. 

3. 

4. 

EN 

30 

   EN 

 
any  other  person,  except  where  the  disclosure  is  made  in  the  normal  course  of  the 
exercise of duties resulting from an employment or profession. 

5. 

Paragraphs 1, 2, 3 and 4 apply to any person who possesses inside information as a 
result of any of the following situations: 

(a)  being a member of the administrative, management or supervisory bodies 

of the issuer; 

(b)  having a holding in the capital of the issuer;  

(c)  his  having  access  to  the  information  through  the  exercise  of  duties 

resulting from an employment or profession;  

(d)  being involved in criminal activities.  

Paragraphs 1, 2, 3 and 4 also apply to any inside information obtained by a person 
under  circumstances  other  than  those  referred  to  in  points  (a)  to  (d)  and  which  the 
person knows or ought to know, is inside information. 

Where the person referred to in paragraph 1 and 2 is a legal person, the provisions of 
those paragraphs shall also apply to the natural persons who take part in or influence 
the decision to carry out, or attempt to carry out, the acquisition or disposal for the 
account of the legal person concerned. 

Where the person referred to in paragraph 1 is a legal person, the provisions of that 
paragraph shall not apply to a transaction by the legal person if the legal person had 
in place effective arrangements which ensure that no person in possession of inside 
information  relevant  to  the  transaction  had  any  involvement  in  the  decision  or 
behaved  in  such  a  way  as  to  influence  the  decision  or  had  any  contact  with  those 
involved in the decision whereby the information could have been transmitted or its 
existence could have been indicated. 

Paragraph  1  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,  or  is  to  satisfy  a  legal  or 
regulatory  obligation  that  arose,  before  the  person  concerned  possessed  inside 
information. 

In  relation  to  auctions  of  emission  allowances  or  other  auctioned  products  based 
thereon that are held pursuant to Regulation (No) 1031/2010, the prohibition under 
paragraph  1  shall  also  apply  to  the  use  of  inside  information  by  submitting, 
modifying or withdrawing a bid for own account of the person that possesses inside 
information or for the account of a third party. 

6. 

7. 

8. 

9. 

Article 8 
Market manipulation  

1. 

For  the  purposes  of  this  Regulation,  market  manipulation  shall  comprise  the 
following activities: 

EN 

31 

   EN 

 
(a) 

entering  into  a  transaction,  placing  an  order  to  trade  or  any  other  behaviour 
which has the following consequences: 

– 

– 

it gives, or is likely to give, false or misleading signals as to the supply 
of,  demand  for,  or  price  of,  a  financial  instrument  or  a  related  spot 
commodity contract; or 

it  secures,  or  is  likely  to  secure,  the  price  of  one  or  several  financial 
instruments  or  a  related  spot  commodity  contracts  at  an  abnormal  or 
artificial level; 

(b) 

entering  into  a  transaction,  placing  an  order  to  trade  or  any  other  behaviour 
affecting  the  price  of  one  or  several  financial  instruments  or  a  related  spot 
commodity  contract,  which  employs  a  fictitious  device  or  any  other  form  of 
deception or contrivance; or 

(c)  disseminating information through the media, including the Internet, or by any 
other  means,  which  has  the  consequences  referred  to  in  subparagraph  (a), 
where the person who made the dissemination knew, or ought to have known, 
that the information was false or misleading. When information is disseminated 
for  the  purposes  of  journalism,  such  dissemination  of  information  shall  be 
assessed taking into account the rules governing the freedom of the press and 
freedom of expression in other media, unless: 

– 

– 

those persons derive, directly or indirectly, an advantage or profits from 
the dissemination of the information in question; or 

the disclosure or dissemination is made with the intention of misleading 
the  market  as  to  the  supply  of,  demand  for,  or  price  of  financial 
instruments.  

2. 

For  the  purposes  of  this  Regulation,  an  attempt  to  engage  in  market  manipulation 
shall comprise the following: 

(a) 

attempting to enter into a transaction, trying to place an order to trade or trying 
to engage in any other behaviour as defined in paragraph 1(a) or (b); or 

(b) 

attempting to disseminate information as defined in paragraph 1(c). 

3. 

The following behaviour shall be considered as market manipulation or attempts to 
engage in market manipulation: 

(a) 

conduct by a person, or persons acting in collaboration, to secure a  dominant 
position over the supply of or demand for a financial instrument or related spot 
commodity  contracts  which  has  the  effect  of  fixing,  directly  or  indirectly, 
purchase or sale prices or creating other unfair trading conditions, 

(b) 

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

EN 

32 

   EN 

 
(c) 

the  sending  of  orders  to  a  trading  venue  by  means  of  algorithmic  trading, 
including  high  frequency  trading,  without  an  intention  to  trade  but  for  the 
purpose of: 

– 

– 

– 

disrupting or delaying the functioning of the trading system of the trading 
venue; 

making  it  more  difficult  for  other  persons  to  identify  genuine  orders  on 
the trading system of the trading venue; or 

creating a false or misleading impression about the supply of or demand 
for a financial instrument. 

(d) 

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

(e) 

the  buying  or  selling  on  the  secondary  market  of  emission  allowances  or 
related  derivatives  prior  to  the  auction  held  pursuant  to  Regulation  No 
1031/2010 with the effect of fixing the auction clearing price for the auctioned 
products at an abnormal or artificial level or misleading bidders bidding in the 
auctions.  

4. 

5. 

For  the  purposes  of  applying  points  (a)  and  (b)  of  paragraph  1  of  Article  8,  and 
without prejudice to the forms of behaviour set out in paragraph 3, Annex I defines 
non-exhaustive indicators related to the employment of fictitious devices or any other 
form  of  deception  or  contrivance,  and  non-exhaustive  indicators  related  to  false  or 
misleading signals and to price securing. 

The Commission may adopt, by means of delegated acts in accordance with Article 
31, measures specifying the indicators laid down in Annex I, in order to clarify their 
elements and to take into account technical developments on financial markets. 

CHAPTER 2 
INSIDER DEALING AND MARKET MANIPULATION 

Article 9 
Prohibition of insider dealing and of improperly disclosing inside information 

A person shall not: 

(a) 

engage or attempt to engage in insider dealing; 

EN 

33 

   EN 

 
(b) 

recommend or induce another person to engage in insider dealing; or  

(c) 

improperly disclose inside information. 

Article 10 
Prohibition of market manipulation 

A  person  shall  not  engage  in  market  manipulation  or  attempt  to  engage  in  market 
manipulation. 

1. 

2. 

3. 

Article 11 
Prevention and detection of market abuse 

Any  person  who  operates  the  business  of  a  trading  venue  shall  adopt  and  maintain 
effective  arrangements  and  procedures  in  accordance  with  [Articles  31  and  56]  of 
Directive [new MiFID] aimed at preventing and detecting market abuse. 

transactions 

Any  person  professionally  arranging  or  executing 
in  financial 
instruments shall have systems in place to detect and report orders and transactions 
that might constitute insider dealing, market manipulation or an attempt to engage in 
market  manipulation  or  insider  dealing.  If  that  person  reasonably  suspects  that  an 
order  or  transaction  in  any  financial  instrument,  whether  placed  or  executed  on  or 
outside a trading venue, might constitute insider dealing, market manipulation or an 
attempt to engage in market manipulation or insider dealing, the person shall notify 
the competent authority without delay. 

ESMA  shall  develop  draft  regulatory  technical  standards  to  determine  appropriate 
arrangements  and  procedures  for  persons  to  comply  with  the  requirements 
established in paragraph 1 and to determine the systems and notification templates to 
be used by persons to comply with the requirements established in paragraph 2. 

ESMA  shall  submit  the  draft  regulatory  technical  standards  referred  to  in  the  first 
subparagraph to the Commission by [...]. 

Power  is  conferred  to  the  Commission  to  adopt  the  regulatory  technical  standards 
referred  to  in  the  first  subparagraph  in  accordance  with  Articles  10  to  14  of 
Regulation 1095/2010. 

CHAPTER 3 
DISCLOSURE REQUIREMENTS 

Article 12 
Public disclosure of inside information 

1. 

An  issuer  of  a  financial  instrument  shall  inform  the  public  as  soon  as  possible  of 
inside information, which directly concerns the issuer, and shall, for an appropriate 

EN 

34 

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2. 

3. 

4. 

period,  post  on  its  Internet  site  all  inside  information  it  is  required  to  disclose 
publicly. 

An emission allowance market participant shall publicly, effectively and in a timely 
manner disclose inside information concerning emission allowances which it holds in 
respect  of  its  business,  including  aviation  activities  as  specified  in  Annex  I  of 
Directive 2003/87/EC or installations within the meaning of Article 3(e) of the same 
Directive  which  the  participant  concerned,  or  parent  undertaking  or  related 
undertaking, owns or controls or for which the participant, or its parent undertaking 
or  related  undertaking,  is  responsible  for  operational  matters,  either  in  whole  or  in 
part. With regard to installations, such disclosure shall include relevant information 
to  the  capacity  and  utilisation  of  installations,  including  planned  or  unplanned 
unavailability of such installations. 

The  first  subparagraph  shall  not  apply  to  an  emission  allowance  market  participant 
where  the  installations  or  aviation  activities  that  it  owns,  controls  or  is  responsible 
for, in the preceding year have had emissions not exceeding a minimum threshold of 
carbon dioxide equivalent and, where they carry out combustion activities, have had 
a rated thermal input not exceeding a minimum threshold. 

The Commission shall adopt, by means of a delegated act in accordance with Article 
31,  measures  establishing  a  minimum  threshold of carbon dioxide equivalent and a 
minimum  threshold  of  rated  thermal  input  for  the  purposes  of  application  of  the 
exemption provided for in the second subparagraph. 

Paragraphs 1 and 2 shall not apply to information which is only inside information 
within the meaning of point (e) of paragraph 1 of Article 6. 

Without prejudice to paragraph 5, an issuer of a financial instrument or an emission 
allowance market participant, not exempted pursuant to the second subparagraph of 
paragraph  2  of  Article  12,  may  under  his  own  responsibility  delay  the  public 
disclosure  of  inside  information,  as  referred  to  in  paragraph  1,  such  as  not  to 
prejudice  his  legitimate  interests  provided  that  both  of  the  following  conditions  are 
met: 

– 

– 

 the omission would not be likely to mislead the public; 

 the issuer of a financial instrument or emission allowance market participant is 
able to ensure the confidentiality of that information. 

Where an issuer of a financial instrument or emission allowance market participant 
has delayed the disclosure of inside information under this paragraph it shall inform 
the competent authority that disclosure of the information was delayed immediately 
after the information is disclosed to the public. 

5. 

A competent authority may permit the delay by an issuer of a financial instrument of 
the public disclosure of inside information provided that the following conditions are 
satisfied: 

– 

– 

 the information is of systemic importance; 

 it is in the public interest to delay its publication; 

EN 

35 

   EN 

 
– 

 the confidentiality of that information can be ensured. 

That  permission  shall  be  in  writing.  The  competent  authority  shall  ensure  that  the 
delay is only for such period as is necessary in the public interest. 

The  competent  authority  shall  at  least  once  every  week  review  whether  the  delay 
continues to be appropriate and shall revoke the authorisation immediately if any of 
the conditions in points (a), (b) or (c) are no longer satisfied.  

Where  an  issuer  of  a  financial  instrument  or  an  emission  allowance  market 
participant,  not  exempted  pursuant  to  the  second  subparagraph  of  paragraph  2  of 
Article 12, 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  duties  resulting  from 
employment or profession, as referred to in Article 7(4), 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 disclosure. This 
paragraph  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 regulations, on 
articles of association, or on a contract. 

Inside  information  relating  to  issuers  of  a  financial  instrument,  whose  financial 
instruments are admitted to trading on an SME growth market, may be posted by the 
trading venue on its website instead of on the website of the issuer where the trading 
venue chooses to provide this facility for issuers on that market. In that event such 
issuer is deemed to have fulfilled the obligation in paragraph 1. 

This Article 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 or, 
in the case of an instrument only traded on a MTF or an OTF, have not requested or 
approved  trading  of  their  financial  instruments  on  a  MTF  or  an  OTF  in  a  Member 
State. 

6. 

7. 

8. 

9. 

ESMA shall develop draft implementing technical standards to determine: 

– 

– 

the technical means for appropriate public disclosure of inside information as 
referred to in paragraphs 1, 6 and 7; 

the technical means for delaying the public disclosure of inside information as 
referred to in paragraphs 4 and 5. 

ESMA shall submit the draft implementing technical standards referred to in the first 
subparagraph to the Commission by [...]. 

Power is conferred to the Commission to adopt the implementing technical standards 
referred  to  in  the  first  subparagraph  in  accordance  with  Article  15  of  Regulation 
1095/2010. 

EN 

36 

   EN 

 
Article 13 
Insider lists 

1. 

Issuers  of  a  financial  instrument  or  emission  allowance  market  participants,  not 
exempted pursuant to the second subparagraph of paragraph 2 of Article 12, and any 
person acting on their behalf or on their account, shall: 

2. 

3. 

4. 

5. 

6. 

– 

– 

– 

draw up a list of all persons working for them, under a contract of employment 
or otherwise, who have access to inside information; 

regularly update the list; and 

provide the list to the competent authority as soon as possible upon its request. 

Issuers of a financial instrument whose financial instruments are admitted to trading 
on an SME growth market shall be exempt from drawing up such a list. However, if 
requested  to  do  so  by  the  competent  authority  as  part  of  the  exercise  of  its 
supervisory  or  investigatory  functions,  that  issuer  shall  provide  the  competent 
authority with a list identifying those persons working for them with access to inside 
information. 

This Article 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 or, 
in the case of an instrument only traded on a MTF or an OTF, have not requested or 
approved  trading  of  their  financial  instruments  on  a  MTF  or  an  OTF  in  a  Member 
State. 

The Commission shall adopt, by means of delegated acts in accordance with Article 
31, measures determining the content of a list as referred to in paragraph 1, including 
information  as  to  the  identities  and  the  reasons  for  persons  to  be  included  on  an 
insider  list,  and  the  conditions  under  which  issuers  of  a  financial  instrument  or 
emission allowance market participants, or entities acting on their behalf, are to draw 
up such a list, including the conditions under which such lists are to be updated, the 
time for which they are kept, and the responsibilities of the persons thereon. 

This Article shall also apply to any auction platform, auctioneer and auction monitor 
in  relation  to  auctions  of  emission  allowances  or  other  auctioned  products  based 
thereon that are held pursuant to Regulation (No) 1031/2010. 

ESMA shall develop draft implementing technical standards to determine the precise 
format  of  insider  lists  and  the  format  for  updating  insider  lists  referred  to  in  this 
Article. 

ESMA shall submit the draft implementing technical standards referred to in the first 
subparagraph to the Commission by [...]. 

Power is conferred to the Commission to adopt the implementing technical standards 
referred  to  in  the  first  subparagraph  in  accordance  with  Article  15  of  Regulation 
1095/2010. 

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Article 14 
Manager's transactions 

1. 

Persons  discharging  managerial  responsibilities  within  an  issuer  of  a  financial 
instrument  or  an  emission  allowance  market  participant,  not  exempted  pursuant  to 
the  second  subparagraph  of  paragraph  2  of  Article  12,  as  well  as  persons  closely 
associated  with  them,  shall  ensure  that  information  is  made  public  about  the 
existence of transactions conducted on their own account relating to the shares of that 
issuer, or to derivatives or other financial instruments linked to them, or in emission 
allowances. Such persons shall ensure that the information is made public within two 
business days after the day on which the transaction occurred. 

2. 

For the purposes of paragraph 1 transactions that must be notified shall include: 

– 

– 

the  pledging  or  lending  of  financial  instruments  by  or  on  behalf  of  a  person 
referred to in paragraph 1; 

transactions undertaken by a portfolio manager or other person on behalf of a 
person  referred  to  in  paragraph  1  including  where  discretion  is  exercised  by 
that manager or other person. 

Paragraph  1  shall  not  apply  to  transactions  totalling  under  EUR  20,000  over  the 
period of a calendar year. 

This Article shall also apply to any auction platform, auctioneer and auction monitor 
in  relation  to  auctions  of  emission  allowances  or  other  auctioned  products  based 
thereon that are held pursuant to Regulation (No) 1031/2010. 

The Commission may adopt, by means of delegated acts in accordance with Article 
31,  measures  modifying  the  threshold  in  paragraph  3  taking  into  account  the 
developments in financial markets. 

The Commission shall adopt, by means of delegated acts in accordance with Article 
31, measures specifying the professional functions of persons who are considered to 
discharge  managerial  responsibility  as  referred  to  in  paragraph  1,  the  types  of 
association, including by birth as well as under civil and contractual law, considered 
to create a close personal association, the characteristics of a transaction referred to 
in paragraph 2 which trigger that duty, and the information that must be made public 
and the means of informing the public. 

Article 15 
Investment recommendations and statistics 

Persons  who  produce  or  disseminate  information  recommending  or  suggesting  an 
investment  strategy,  intended  for  distribution  channels  or  for  the  public,  shall  take 
reasonable  care  to  ensure  that  such  information  is  objectively  presented,  and  to 
disclose  their  interests  or  indicate  conflicts  of  interest  concerning  the  financial 
instruments to which that information relates. 

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

3. 

4. 

5. 

6. 

1. 

2. 

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38 

   EN 

 
3. 

ESMA shall develop draft regulatory technical standards to determine the technical 
arrangements,  for  the  various  categories  of  person  referred  to  in  paragraph  1,  for 
objective presentation of information recommending an investment strategy and for 
disclosure of particular interests or indications of conflicts of interest. 

ESMA  shall  submit  the  draft  regulatory  technical  standards  referred  to  in  the  first 
subparagraph to the Commission by [...]. 

Power  is  conferred  to  the  Commission  to  adopt  the  regulatory  technical  standards 
referred  to  in  the  first  subparagraph  in  accordance  with  Articles  10  to  14  of 
Regulation 1095/2010. 

CHAPTER 4 
ESMA AND COMPETENT AUTHORITIES 

Article 16 
Competent authorities 

Without  prejudice  to  the  competences  of  the  judicial  authorities,  each  Member  State  shall 
designate a single administrative competent authority for the purpose of this Regulation. The 
competent  authority  shall  ensure  that  the  provisions  of  this  regulation  are  applied  on  its 
territory, regarding all actions carried out on its territory, and those actions carried out abroad 
relating  to  instruments  admitted  to  trading  on  a  regulated  market,  for  which  a  request  for 
admission to trading on such market has been made, or which are traded on an MTF or OTF 
operating,  within  its  territory.  Member  States  shall  inform  the  Commission,  ESMA  and  the 
competent authorities of other Member States thereof.  

Article 17 
Powers of competent authorities 

1. 

Competent authorities shall exercise their functions in any of the following ways:  

(a)  directly;  

(b) 

in collaboration with other authorities or with the market undertakings;  

(c)  under  their  responsibility  by  delegation  to  such  authorities  or  to  market 

undertakings;  

(d)  by application to the competent judicial authorities.  

2. 

In order to fulfil their duties under this Regulation, competent authorities shall have, 
in conformity with national law, at least the following supervisory and investigatory 
powers:  

(a) 

request  access  to  any  document  in  any  form,  and  to  receive  or  take  a  copy 
thereof; 

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39 

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(b) 

(c) 

(d) 

(e) 

(f) 

request  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 principals, and if necessary, to summon and question any such 
person with a view to obtain information; 

in  relation  to  derivatives  on  commodities,  request  information  from  market 
participants on related spot markets according to standardized formats, obtain 
reports on transactions, and have direct access to traders' systems; 

carry out on-site inspections at sites other than private premises with or without 
announcement; 

after  having  obtained  prior  authorisation  from  the  judicial  authority  of  the 
Member  State  concerned  in  accordance  with  national  law,  and  where  a 
reasonable suspicion exists that documents related to the subject-matter of the 
inspection  may  be  relevant  to  prove  a  case  of  insider  dealing  or  market 
manipulation  in  violation  of  this  Regulation  or  Directive  [new  MAD],  enter 
private premises in order to seize documents in any form ;  

require  existing  telephone  and  existing  data  traffic  records  held  by  a 
telecommunication  operator  or  by  an  investment  firm,  where  a  reasonable 
suspicion exists that such records related to the subject-matter of the inspection 
may  be  relevant  to  prove  insider  dealing  or  market  manipulation  as  defined 
in[new  MAD]  in  violation  of  this  Regulation  or  Directive  [new  MAD];  these 
records shall however not concern the content of the communication to which 
they relate.] 

The  competent  authorities  shall  exercise  the  supervisory  and  investigatory  powers, 
referred to in paragraph 2, in accordance with national law. 

The  processing  of  personal  data  collected  in  the  exercise  of  the  supervisory  and 
investigatory powers pursuant to this Article shall be carried out in accordance with 
Directive 95/46/EC. 

Member States shall ensure that appropriate measures are in place so that competent 
authorities  have  all  the  supervisory  and  investigatory  powers  that  are  necessary  to 
fulfil their duties. 

Article 18 
Cooperation with ESMA 

The  competent  authorities  shall  cooperate  with  ESMA  for  the  purposes  of  this 
Regulation, in accordance with Regulation (EU) No 1095/2010. 

The competent authorities shall, without delay, provide ESMA with all information 
necessary  to  carry  out  its  duties,  in  accordance  with  Article  35  of  Regulation  (EU) 
No 1095/2010. 

ESMA  shall  develop  draft  implementing  technical  standards  to  determine  the 
procedures and forms for exchange of information as referred to in paragraph 2. 

3. 

4. 

5. 

1. 

2. 

3. 

EN 

40 

   EN 

 
1. 

2. 

3. 

4. 

ESMA shall submit the draft implementing technical standards referred to in the first 
subparagraph to the Commission by [...]. 

Power is conferred to the Commission to adopt the implementing technical standards 
referred  to  in  the  first  subparagraph  in  accordance  with  Article  15  of  Regulation 
1095/2010. 

Article 19 
Obligation to co-operate 

Competent  authorities  shall  cooperate  with  each  other  and  ESMA  where  it  is 
necessary  for  the  purposes  of  this  Regulation.  In  particular,  competent  authorities 
shall render assistance to competent authorities of other Member States and ESMA, 
and, without undue delay, exchange information and cooperate in investigation and 
enforcement  activities.  This  cooperation  and  assistance  shall  also  apply  as  regards 
the Commission in relation to the exchange of information relating to commodities 
which are agricultural products listed in Annex I to the Treaty. 

Competent  authorities  and  ESMA  shall  cooperate  with  ACER  and  the  national 
regulatory authorities of the Member States to ensure that a coordinated approach is 
taken to the enforcement of the relevant rules where transactions, orders to trade or 
other actions or behaviours relate to one or more financial instruments to which this 
Regulation  applies  and  also  to  one  or  more  wholesale  energy  products  to  which 
Article  3,  4  and  5  of  [Regulation  (EU)  No…of  the  European  Parliament  and  the 
Council on Wholesale Energy Market Integrity and Transparency] apply. Competent 
authorities shall consider the specific characteristics of the definitions of Article 2 of 
[Regulation  (EU)  No…of  the  European  Parliament  and  the  Council  on  Wholesale 
Energy Market Integrity and Transparency] and the provisions of Article 3, 4 and 5 
of [Regulation (EU) No…of the European Parliament and the Council on Wholesale 
Energy Market  Integrity  and Transparency] when they apply Articles 6, 7 and 8 of 
this Regulation to financial instruments related to wholesale energy products.  

Competent  authorities  shall,  on  request,  immediately  supply  any  information 
required for the purpose referred to in paragraph 1. 

Where a competent authority is convinced that acts contrary to the provisions of this 
Regulation are being, or have been, carried out on the territory of another Member 
State  or  that  acts  are  affecting  financial  instruments  traded  on  a  trading  venue 
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  and  to 
ESMA  and,  in  relation  to  wholesale  energy  products,  to  ACER.  The  competent 
authorities  of  the  various  Member  States  involved  shall  consult  each  other  and 
ESMA  and,  in  relation  to  wholesale  energy  products,  ACER,  on  the  appropriate 
action to take and inform each other of significant interim developments. They shall 
coordinate  their  action,  in  order  to  avoid  possible  duplication  and  overlap  when 
applying administrative measures, sanctions and fines to those cross border cases in 
accordance  with  Articles  24,  25,  26,  27  and  28,  and  assist  each  other  in  the 
enforcement of their decisions. 

EN 

41 

   EN 

 
5. 

The  competent  authority  of  one  Member  State  may  request  assistance  of  the 
competent  authority  of  another  Member  State  with  regard  to  on-site  inspections  or 
investigations. 

The  competent  authority  shall  inform  ESMA  of  any  request  referred  to  in  the  first 
subparagraph.  In  case  of  an  investigation  or  an  inspection  with  cross-border  effect, 
ESMA shall if requested to do so by one of the competent authorities coordinate the 
investigation or inspection. 

Where  a  competent  authority  receives  a  request  from  a  competent  authority  of 
another Member State to carry out an on-site inspection or an investigation, it may do 
any of the following: 

(a) 

carry out the on-site inspection or investigation itself; 

(b) 

(c) 

allow the competent authority which submitted the request to participate in an 
on-site inspection or investigation; 

allow the competent authority which submitted the request to carry out the on-
site inspection or investigation itself;  

(d) 

appoint auditors or experts to carry out the on-site inspection or investigation;  

(e) 

share  specific  tasks  related  to  supervisory  activities  with  the  other  competent 
authorities.  

Without  prejudice  to  Article  258  TFEU,  a  competent  authority  whose  request  for 
information  or  assistance  in  accordance  with  paragraphs  1,  2,  3  and  4  is  not  acted 
upon  within  a  reasonable  time  or  whose  request  for  information  or  assistance  is 
rejected may refer that rejection or absence of action within a reasonable timeframe 
to ESMA. 

In those situations, ESMA may act in accordance with Article 19 of Regulation (EU) 
No  1095/2010,  without  prejudice  to  the  possibility  of  ESMA  acting  in  accordance 
with Article 17 of Regulation (EU) No 1095/2010. 

Competent  authorities  shall  cooperate  and  exchange  information  with  relevant 
national  and  third  country  regulatory  authorities  responsible  for  the  related  spot 
markets  where  they  have  reasonable  grounds  to  suspect  that  acts,  which  constitute 
market abuse in accordance with Article 2, are being, or have been, carried out. This 
cooperation shall ensure a consolidated overview of the financial and spot markets, 
and detect and sanction cross-market and cross-border market abuses. 

In  relation  to  emission  allowances,  the  co-operation  and  exchange  of  information 
provided for under the preceding subparagraph shall also be ensured with: 

(a) 

the  auction  monitor,  with  regard  to  auctions  of  emission  allowances  or  other 
auctioned  products  based  thereon  that  are  held  pursuant  to  Regulation  (No) 
1031/2010; 

6. 

7. 

EN 

42 

   EN 

 
(b) 

competent  authorities, 
the  Central 
registry  administrators, 
Administrator,  and  other  public  bodies  charged  with  the  supervision  of 
compliance under Directive 2003/87/EC. 

including 

ESMA  shall  perform  a  facilitation  and  coordination  role  in  relation  to  the 
cooperation  and  exchange  of  information  between  competent  authorities  and 
regulatory  authorities  in  other  Member  states  and  third  countries.  Competent 
authorities  shall  wherever  possible  conclude  cooperation  arrangements  with  third 
country regulatory authorities responsible for the related spot markets in accordance 
with Article 20. 

The disclosure of personal data to a third country shall be governed by Articles  22 
and 23. 

ESMA  shall  develop  draft  implementing  technical  standards  to  determine  the 
procedures  and  forms  for  exchange  of  information  and  assistance  as  referred  to  in 
this Article. 

ESMA shall submit the draft implementing technical standards referred to in the first 
subparagraph to the Commission by [...]. 

Power is conferred to the Commission to adopt the implementing technical standards 
referred  to  in  the  first  subparagraph  in  accordance  with  Article  15  of  Regulation 
1095/2010. 

Article 20 
Cooperation with third countries 

The  competent  authorities  of  Member  States  shall  where  necessary  conclude 
cooperation  arrangements  with  competent  authorities  of  third  countries  concerning 
the  exchange  of  information  with  competent  authorities  in  third  countries  and  the 
enforcement  of  obligations  arising  under  this  Regulation  in  third  countries.  These 
cooperation arrangements shall ensure at least an efficient exchange of  information 
that allows the competent authorities to carry out their duties under this Regulation. 

A  competent  authority  shall  inform  ESMA  and  other  competent  authorities  of 
Member States where it proposes to enter into such an arrangement. 

ESMA  shall  coordinate  the  development  of  cooperation  arrangements  between  the 
competent  authorities  of  Member  States  and  the  relevant  competent  authorities  of 
third  countries.  For  that  purpose,  ESMA  shall  prepare  a  template  document  for 
cooperation  arrangements  that  may  be  used  by  competent  authorities  of  Member 
States. 

ESMA shall also coordinate the exchange between competent authorities of Member 
States of information obtained from competent authorities of third countries that may 
be relevant to the taking of measures under Articles 24, 25, 26, 27 and 28. 

The competent authorities shall conclude cooperation arrangements on exchange of 
information  with  the  competent  authorities  of  third  countries  only  where  the 
information  disclosed  is  subject  to  guarantees  of  professional  secrecy  which  are  at 

8. 

9. 

1. 

2. 

3. 

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43 

   EN 

 
4. 

5. 

6. 

7. 

least equivalent to those set out in Article 21. Such exchange of information must be 
intended for the performance of the tasks of those competent authorities. 

The disclosure of personal data to a third country shall be governed by Articles 22 
and 23. 

Article 21 
Professional secrecy 

Any  confidential  information  received,  exchanged  or  transmitted  pursuant  to  this 
Regulation  shall  be  subject  to  the  conditions  of  professional  secrecy  laid  down  in 
paragraph 2 and 3. 

The obligation of professional secrecy applies to all persons who work or who have 
worked  for  the  competent  authority  or  for  any  authority  or  market  undertaking  to 
whom  the  competent  authority  has  delegated  its  powers,  including  auditors  and 
experts contracted 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. 

All information exchanged between competent authorities under this Regulation shall 
be considered confidential, except when the competent authority states at the time of 
communication  that  the  information  may  be  disclosed  or  where  such  disclosure  is 
necessary for legal proceedings. 

Article 22 
Data protection 

With  regard  to  the  processing  of  personal  data  carried  out  by  Member  States  within  the 
framework  of  this  Regulation,  competent  authorities  shall  apply  the  provisions  of  Directive 
95/46/EC. With regard to the processing of personal data by ESMA within the framework of 
this Regulation, ESMA shall comply with the provisions of Regulation (EC) No 45/2001. 

Personal data shall be retained for a maximum period of 5 years. 

Article 23 
Disclosure of personal data to third countries 

1. 

The  competent  authority  of  a  Member  State  may  transfer  personal  data  to  a  third 
country provided the requirements of Directive 95/46/EC, particularly of Articles 25 
or 26, are fulfilled and only on a case-by-case basis. The competent authority of the 
Member  State  shall  ensure  that  the  transfer  is  necessary  for  the  purpose  of  this 
Regulation.  The  competent  authority  shall  ensure  that  the  third  country  does  not 
transfer  the  data  to  another  third  country  unless  it  is  given  express  written 
authorisation and complies with the conditions specified by the competent authority 
of the Member State. Personal data may only be transferred to a third country which 
provides an adequate level of protection of personal data. 

EN 

44 

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2. 

The competent authority of a Member State shall only disclose information received 
from  a  competent  authority  of  another  Member  State  to  a  competent  authority  of  a 
third  country  where  the  competent  authority  of  the  Member  State  concerned  has 
obtained  express  agreement  of  the  competent  authority  which  transmitted  the 
information  and,  where  applicable,  the  information  is  disclosed  solely  for  the 
purposes for which that competent authority gave its agreement. 

3. 

Where a cooperation agreement provides for the exchange of personal data, it shall 
comply with Directive 95/46/EC. 

CHAPTER 5 
Administrative measures and sanctions 

Article 24 
Administrative measures and sanctions 

1. 

2. 

Member  States  shall  lay  down  the  rules  on  administrative  measures  and  sanctions 
applicable in the circumstances defined in Article 25 to the persons responsible for 
breaches of the provisions of this Regulation and shall take all measures necessary to 
ensure that they are implemented. The measures and sanctions provided for shall be 
effective, proportionate and dissuasive. 

By  [24  months  after  entry  into  force  of  this  Regulation]  the  Member  States  shall 
notify the rules referred to in the first subparagraph to the Commission and ESMA. 
They  shall  notify  the  Commission  and  ESMA  without  delay  of  any  subsequent 
amendment thereto. 

In the exercise of their sanctioning powers under circumstances defined in Article 25, 
competent  authorities  shall  cooperate  closely  to  ensure  that  the  administrative 
measures and sanctions produce the desired results of this Regulation and coordinate 
their  action  in  order  to  avoid  possible  duplication  and  overlap  when  applying 
administrative measures and sanctions and fines to cross border cases in accordance 
with Article 19 

Article 25 
Sanctioning powers  

This Article shall apply in all the following circumstances: 

(a) 

a person engages in insider dealing in breach of Article 9; 

(b) 

a person recommends or induces another person to engage in insider dealing in 
breach of Article 9; 

(c) 

a person improperly discloses insider information in breach of Article 9; 

(d) 

a person engages in market manipulation in violation of Article 10; 

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(e) 

a person attempts to engage in market manipulation in violation of Article 10; 

(f) 

(g) 

(h) 

(i) 

(j) 

(k) 

(l) 

a person who operates the business of a trading venue of a trading venue fails 
to  adopt  and  maintain  effective  arrangements  and  procedures  aimed  at 
preventing and detecting market manipulation practices, in breach of Article 11 
(1) ; 

a  person  professionally  arranging  or  executing  transactions  fails  to  have  in 
place  systems  to  detect  and  report  transactions  that  might  constitute  insider 
dealing, market manipulation or an attempt to engage in market manipulation 
or  fails  to  notify  suspicious  orders  or  transactions  to  the  competent  authority 
without delay, in breach of Article 11 (2); 

an  issuer  of  a  financial  instrument  or  emission  allowance  market  participant, 
not  exempted  pursuant  to  the  second  subparagraph  of  paragraph  2  of  Article 
12,  fails  to  inform  the  public  as  soon  as  possible  of  inside  information  or  to 
post on its Internet site inside information to be disclosed publicly, in breach of 
Article 12 (1); 

an issuer of a financial instrument or an emission allowance market participant, 
not  exempted  pursuant  to  the  second  subparagraph  of  paragraph  2  of  Article 
12, delays the disclosure of inside information where such a delay is likely to 
mislead the public or without ensuring the confidentiality of that information, 
in breach of Article 12 (2); 

an issuer of a financial instrument or an emission allowance market participant, 
not  exempted  pursuant  to  the  second  subparagraph  of  paragraph  2  of  Article 
12,  fails  to  inform  the  competent  authority  that  the  disclosure  of  inside 
information was delayed, in breach of Article 12 (2); 

an issuer of a financial instrument or an emission allowance market participant, 
or  a  person  acting  on  their  behalf  or  on  their  account  fails  to  disclose  to  the 
public the inside information disclosed to any person in the normal exercise of 
duties resulting from employment or profession, in breach of Article 12 (4); 

an issuer of a financial instrument, an emission allowance market participant, 
not  exempted  pursuant  to  the  second  subparagraph  of  paragraph  2  of  Article 
12,  or  a  person  acting  on  their  behalf  or  on  their  account  fails  to  draw  up, 
regularly  update  or  transmit  to  the  competent  authority  on  request  a  list  of 
insiders, in breach of Article 13 (1); 

(m)  a  person  discharging  managerial  responsibilities  within  an  issuer  of  financial 
instruments, an emission allowance market participant, not exempted pursuant 
to  the  second  subparagraph  of  paragraph  2  of  Article  12,  or  a  person  closely 
associated  with  them  fails  to  make  public  the  existence  of  transactions 
conducted on their own account, in breach of Article 14 (1) and (2); 

(n) 

a person producing or disseminating information recommending or suggesting 
an investment strategy intended for distribution channels or for the public fails 
to take reasonable care to ensure the information is objectively presented or to 
disclose interests or conflicts of interest, in breach of Article 15 (1); 

EN 

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(o) 

(p) 

(q) 

(r) 

(s) 

(t) 

(u) 

a  person  who  works  or  has  worked  for  a  competent  authority  or  for  any 
authority  or  market  undertaking  to  whom  the  competent  authority  has 
delegated  its  tasks  discloses  information  covered  by  professional  secrecy  in 
breach of Article 21; 

a  person  fails  to  grant  the  competent  authority  access  to  a  document  and  to 
provide a copy of it, requested in accordance with Article 17 (2) (a); 

a person fails to provide information or to respond to a summons demanded by 
the competent authority in accordance with Article 17 (2) (b); 

a  market  participant  fails  to  provide  competent  authority  with  information  in 
relation  to  commodity  derivatives  or  with  suspicious  transaction  reports  or  to 
grant direct access to traders' systems, requested in accordance with Article 17 
(2) (c); 

a  person  fails  to  grant  access  to  a  site  for  inspection,  requested  by  the 
competent authority in accordance with Article 17 (2) (d) ; 

a  person  fails  to  grant  access  to  existing  telephone  and  data  traffic  records 
requested in accordance with Article 17 (2) (f); 

a person fails to comply with a request by the competent authority to cease a 
practice contrary to this Regulation, to suspend trading of financial instruments 
or to publish a corrective statement; 

(v) 

a  person  carries  out  an  activity  when  prohibited  from  doing  so  by  the 
competent authority. 

Article 26 
Administrative measures and sanctions  

1. 

Without prejudice to the supervisory powers of competent authorities in accordance 
with Article 17, in case of a breach referred to in paragraph 1, competent authorities 
shall,  in  conformity  with  national  law,  have  the  power  to  impose  at  least  the 
following administrative measures and sanctions: 

(a) 

an  order  requiring  the  person  responsible  for  the  breach  to  cease  the  conduct 
and to desist from a repetition of that conduct; 

(b)  measures to be applied for failure to cooperate in an investigation covered by 

Article 17; 

(c)  measures which have the effect of putting an end to a continuous breach of this 

Regulation and eliminating its effect; 

(d) 

a public statement which indicates the person responsible and the nature of the 
breach, published on the website of competent authorities; 

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(e) 

correction of false or misleading disclosed information including by requiring 
any  issuer  or  other  person  who  has  published  or  disseminated  false  or 
misleading information to publish a corrective statement; 

(f) 

temporary prohibition of an activity; 

(g)  withdrawal  of  the  authorisation  of  an  investment  firm  as  defined  in  Article  4 

(1) of Directive [new MiFID]; 

(h) 

a temporary ban against any member of an investment firm's body or any other 
natural  person,  who  is  held  responsible,  to  exercise  functions  in  investment 
firms; 

(i) 

suspend trading of the financial instruments concerned; 

(j) 

request the freezing and/or sequestration of assets; 

(k) 

(l) 

(m) 

administrative  pecuniary  sanctions  of  up  to  twice  the  amount  of  the  profits 
gained or losses avoided because of the breach where those can be determined; 

in respect of a natural person, administrative pecuniary sanctions of up to [EUR 
5 000 000] or in the Member States where the Euro is not the official currency, 
the corresponding value in the national currency on the date of entry to force of 
this Regulation; 

in respect of a legal person, administrative pecuniary sanctions of up to 10 % 
of  its  total  annual  turnover  in  the  preceding  business  year;  where  the  legal 
person is a subsidiary of a parent undertaking [as defined in Articles 1 and 2 of 
Directive  83/349/EEC],  the  relevant  total  annual  turnover  shall  be  the  total 
annual turnover resulting from the consolidated account of the ultimate parent 
undertaking in the preceding business year. 

2. 

3. 

Competent  authorities  may  have  other  sanctioning  powers  in  addition  to  those 
referred  to  in  paragraph  2  and  may  provide  for  higher  levels  of  administrative 
pecuniary sanctions than those established in that paragraph. 

Every  administrative  measure  and  sanction  imposed  for  breach  of  this  Regulation 
shall  be  published  without  undue  delay,  including  at  least  information  on  the  type 
and  nature  of  the  breach  and  the  identity  of  persons  responsible  for  it,  unless  such 
publication  would  seriously  jeopardise  the  stability  of  financial  markets.  Where 
publication would cause disproportionate damage to the parties involved, competent 
authorities shall publish the measures and sanctions on an anonymous basis. 

Article 27 
Effective application of sanctions  

1. 

When  determining  the  type  of  administrative  measures  and  sanctions,  competent 
authorities shall take into account all relevant circumstances, including: 

(a) 

the gravity and duration of the breach; 

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(b) 

the degree of responsibility of the responsible person; 

(c) 

(d) 

(e) 

the  financial  strength  of  the  responsible  person,  as  indicated  by  the  total 
turnover of the responsible legal person or the annual income of the responsible 
natural person; 

the  importance  of  the  profits  gained  or  losses  avoided  by  the  responsible 
person, insofar as they can be determined; 

the level of cooperation of the responsible person with the competent authority, 
without prejudice to the need to ensure disgorgement of profits gained or losses 
avoided by that person; 

(f) 

previous breaches by the responsible person. 

Additional  factors  may  be  taken  into  account  by  competent  authorities,  if  such 
factors are specified in national law. 

2. 

ESMA shall issue guidelines addressed to competent authorities in accordance with 
Article  16  of  Regulation  No  (EU)  1095/2010  on  types  of  administrative  measures 
and sanctions and level of fines. 

Article 28 
Appeal 

Member  States  shall  ensure  that  decisions  taken  by  the  competent  authority  in  accordance 
with this Regulation are subject to the right of appeal. 

Article 29 
Reporting of violations 

1. 

Member  States  shall  put  in  place  effective  mechanisms  to  encourage  reporting  of 
breaches of this Regulation to competent authorities, including at least: 

(a) 

specific procedures for the receipt of reports of breaches and their follow-up; 

(b) 

appropriate protection for persons who report potential or actual breaches; 

(c)  protection  of  personal  data  concerning  both  the  person  who  reports  the 
potential  or  actual  breaches  and  the  accused  person  in  compliance  with  the 
principles laid down in Directive 95/46/EC; 

(d) 

appropriate procedures to ensure the right of the accused person of defence and 
to be heard before the adoption of a decision concerning him and the right to 
seek effective judicial remedy against any decision or measure concerning him. 

2. 

Financial  incentives  to  persons  who  offer  salient  information  about  potential 
breaches  of  this  Regulation  may  be  granted  in  conformity  with  national  law  where 
such  persons  do  not  have  a  pre-existing  legal  or  contractual  duty  to  report  such 
information,  that  the  information  is  new,  and  it  results  in  the  imposition  of  an 

EN 

49 

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3. 

1. 

2. 

3. 

4. 

administrative  sanction  or  measure  or  a  criminal  sanction  for  a  breach  of  this 
Regulation. 

The  Commission  shall  adopt,  by  means  of  implementing  acts  in  accordance  with 
Article 33, measures to specify the procedures referred to in paragraph 1, including 
the  modalities  of  reporting  and  the  modalities  for  following-up  of  reports,  the 
measures for the protection of persons. 

Article 30 
Exchange of information with ESMA 

Competent  and  judicial  authorities  shall  provide  ESMA  annually  with  aggregated 
information  regarding  all  administrative  measures,  sanctions  and  fines  imposed  in 
accordance  with  Articles  24,  25,  26,  27,  28  and  29.  ESMA  shall  publish  this 
information in an annual report. 

Where the competent authority has disclosed administrative measures, sanctions and 
fines  to  the  public,  it  shall  simultaneously  report  those  administrative  measures, 
sanctions and fines to ESMA. 

Where a published administrative measure, sanction and fine relates to an investment 
firm  authorised  in  accordance  with  Directive  [new  MiFID],  ESMA  shall  add  a 
reference  to  the  published  sanction  in  the  register  of  investment  firms  established 
under Article 5(3) of Directive [new MiFID]. 

ESMA  shall  develop  draft  implementing  technical  standards  to  determine  the 
procedures and forms for exchange of information as referred to in this Article. 

ESMA shall submit the draft implementing technical standards referred to in the first 
subparagraph to the Commission by [...]. 

Power is conferred to the Commission to adopt the implementing technical standards 
referred  to  in  the  first  subparagraph  in  accordance  with  Article  15  of  Regulation 
1095/2010. 

CHAPTER 6 
DELEGATED ACTS 

Article 31 
Delegation of powers 

The Commission shall be empowered to adopt delegated acts in accordance with Article 32 
concerning the supplementing and amending of the conditions for buy-back programmes and 
stabilisation  of  financial  instruments,  the  definitions  in  this  Regulation,  the  conditions  for 
drawing  up  insider  lists,  the  conditions  relating  to  managers'  transactions  and  the 
arrangements for persons who provide information that may lead to the detection of breaches 
of this Regulation. 

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Article 32 
Exercise of the delegation 

The  power  to  adopt  delegated  acts  is  conferred  on  the  Commission  subject  to  the 
conditions laid down in this Article. 

The delegation of power shall be conferred for an indeterminate period of time from 
the date referred to in Article 36(1). 

The delegation of power may be revoked at any time by the European Parliament or 
by  the  Council.  A  decision  of  revocation  shall  put  an  end  to  the  delegation  of  the 
power specified in that decision. It shall take effect the day following the publication 
of  the  decision  in  the  Official  Journal  of  the  European  Union  or  at  a  later  date 
specified therein. It shall not affect the validity of any delegated acts already in force. 

As soon as it adopts a delegated act, the Commission shall notify it simultaneously to 
the European Parliament and to the Council. 

A delegated act shall enter into force only if no objection has been expressed either 
by  the  European  Parliament  or  the  Council  within  a  period  of  2  months  of 
notification of that act to the European Parliament and the Council or if, before the 
expiry of that period, the European Parliament and the Council have both informed 
the Commission that they will not object. That period shall be extended by 2 months 
at the initiative of the European Parliament or the Council. 

CHAPTER 7 
IMPLEMENTING ACTS 

Article 33 
Committee procedure  

For the adoption of implementing acts under Article 29(3) the Commission shall be 
assisted by the European Securities Committee established by Commission Decision 
2001/528/EC41.  That  committee  shall  be  a  committee  within  the  meaning  of 
Regulation (EU) No 182/201142. 

Where  reference  is  made  to  this  paragraph,  Articles  5  of  Regulation  (EU)  No 
182/2011 shall apply, having regard to the provisions of Article 8 thereof. 

1. 

2. 

3. 

4. 

5. 

1. 

2. 

41 
42 

OJ L 191, 13.7.2001, p.45. 
OJ L 55, 28.2.2011, p.13. 

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51 

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CHAPTER 8 
TRANSITIONAL AND FINAL PROVISIONS 

Article 34 
Repeal of Directive 2003/6/EC  

Directive  2003/6/EC  shall  be  repealed  with  effect  from  [24  months  after  entry  into  force  of 
this  Regulation].  References  to  Directive  2003/6/EC  shall  be  construed  as  references  to  this 
Regulation. 

Article 35 
Transitional provisions 

Market  practices  existing  before  the  entry  into  force  of  this  Regulation  and  accepted  by 
competent  authorities  in  accordance  with  Commission  Regulation  (EC)  No  2273/200343  for 
the purpose of applying point 2(a) of Article 1 of Directive 2003/6/EC, may remain applicable 
until [12 months after entry into application of this Regulation] provided that they are notified 
to  ESMA  by  the  competent  authorities  concerned  before  the  date  of  application  of  this 
Regulation. 

Article 36 
Entry into force and application  

1. 

2. 

This  Regulation  shall  enter  into  force  [on  the  twentieth  day  following  that]  of  its 
publication in the Official Journal of the European Union. 

It  shall  apply  from  [24  months  after  entry  into  force  of  this  Regulation]  except  for 
Articles  3(2),  ,  8(5),  11(3),  12(9),  13(4),  13(6),  14(5),  14(6),  15(3),  18(9),  19(9), 
28(3) and 29(3) which shall apply immediately following the entry into force of this 
Regulation. 

This Regulation shall be binding in its entirety and directly applicable in all Member States. 

Done at Brussels, 

For the European Parliament 
The President 

For the Council 
The President

43 

OJ L 162, 29.04.2004, p. 72.  

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52 

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ANNEX I 

A. Indicators of manipulative behaviour related to false or misleading signals and to 
price securing 

For  the  purposes  of  applying  point  (a)  of  paragraph  1  of  Article  8  of  this  Regulation,  and 
without prejudice to the forms of behaviour set out in paragraph 3 thereof, the following non-
exhaustive  indicators,  which  should  not  necessarily  be  deemed  in  themselves  to  constitute 
market  manipulation,  shall  be  taken  into  account  when  transactions  or  orders  to  trade  are 
examined by market participants and competent authorities: 

(a) 

(b) 

the extent to which orders to trade given or transactions undertaken represent a 
significant  proportion  of  the  daily  volume  of  transactions  in  the  relevant 
financial  instrument,  related  spot  commodity  contract,  or  auctioned  product 
based  on  emission  allowances,  in  particular  when  these  activities  lead  to  a 
significant change in their prices; 

the extent to which orders to trade given or transactions undertaken by persons 
with a significant buying or selling position in a financial instrument, a related 
spot  commodity  contract,  or  a  auctioned  product  based  on  emission 
allowances, lead to significant changes in the price of that financial instrument, 
related  spot  commodity  contract,  or  auctioned  product  based  on  emission 
allowances; 

(c)  whether transactions undertaken lead to no change in beneficial ownership of a 
financial instrument, a related spot commodity contract, or a auctioned product 
based on emission allowances; 

(d) 

(e) 

(f) 

(g) 

the  extent  to  which  orders  to  trade  given  or  transactions  undertaken  include 
position reversals in a short period and represent a significant proportion of the 
daily volume of transactions in the relevant financial instrument, a related spot 
commodity contract, or a auctioned product based on emission allowances, and 
might  be  associated  with  significant  changes  in  the  price  of  a  financial 
instrument, a related spot commodity contract, or a auctioned product based on 
emission allowances; 

the  extent  to  which  orders  to  trade  given  or  transactions  undertaken  are 
concentrated within a short time span in the trading session and lead to a price 
change which is subsequently reversed; 

the extent to which orders to trade given change the representation of the best 
bid or offer prices in a financial instrument, a related spot commodity contract, 
or  a  auctioned  product  based  on  emission  allowances,  or  more  generally  the 
representation  of  the  order  book  available  to  market  participants,  and  are 
removed before they are executed; 

the extent to which orders to trade are given or transactions are undertaken at 
or  around  a  specific  time  when  reference  prices,  settlement  prices  and 
valuations  are  calculated  and  lead  to  price  changes  which  have  an  effect  on 
such prices and valuations. 

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53 

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B. Indicators of manipulative behaviours related to the employment of fictitious devices 
or any other form of deception or contrivance 

For  the  purposes  of  applying  point  (b)  of  paragraph  1  of  Article  8  of  this  Regulation,  and 
without prejudice to the forms of behaviour set out in the second paragraph of point 3 thereof, 
the  following  non-exhaustive  indicators,  which  should  not  necessarily  be  deemed  in 
themselves to constitute market manipulation, shall be taken into account when transactions 
or orders to trade are examined by market participants and competent authorities: 

(a)  whether  orders  to  trade  given  or  transactions  undertaken  by  persons  are 
preceded  or  followed  by  dissemination  of  false  or  misleading  information  by 
the same persons or persons linked to them; 

(b)  whether  orders  to  trade  are  given  or  transactions  are  undertaken  by  persons 
before  or  after  the  same  persons  or  persons  linked  to  them  produce  or 
disseminate  investment  recommendations  which  are  erroneous  or  biased  or 
demonstrably influenced by material interest. 

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54 

   EN 

 
LEGISLATIVE FINANCIAL STATEMENT FOR PROPOSALS 

1. 

FRAMEWORK OF THE PROPOSAL/INITIATIVE  

1.1.  Title of the proposal/initiative  

1.2.  Policy area(s) concerned in the ABM/ABB structure 

1.3.  Nature of the proposal/initiative  

1.4.  Objective(s)  

1.5.  Grounds for the proposal/initiative  

1.6.  Duration and financial impact  

1.7.  Management method(s) envisaged  

2. 

MANAGEMENT MEASURES  

2.1.  Monitoring and reporting rules  

2.2.  Management and control system  

2.3.  Measures to prevent fraud and irregularities  

3. 

ESTIMATED FINANCIAL IMPACT OF THE PROPOSAL/INITIATIVE  

3.1.  Heading(s)  of  the  multiannual  financial  framework  and  expenditure  budget  line(s) 
affected  

3.2.  Estimated impact on expenditure  

3.2.1. Summary of estimated impact on expenditure  

3.2.2. Estimated impact on operational appropriations  

3.2.3. Estimated impact on appropriations of an administrative nature 

3.2.4. Compatibility with the current multiannual financial framework 

3.2.5. Third-party participation in financing  

3.3.  Estimated impact on revenue

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55 

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LEGISLATIVE FINANCIAL STATEMENT FOR PROPOSALS 

1. 

FRAMEWORK OF THE PROPOSAL/INITIATIVE  

1.1. 

Title of the proposal/initiative  

Proposal for a Regulation of the European Parliament and of the Council on insider dealing 
and market manipulation (market abuse)  

Proposal  for  a  Directive  of  the  European  Parliament  and  of  the  Council  on  criminal 
sanctions for insider dealing and market manipulation (market abuse)  

1.2. 

Policy area(s) concerned in the ABM/ABB structure44  

Internal Market – Financial markets  

1.3. 

Nature of the proposal/initiative  

(cid:58) The proposal/initiative relates to a new action  

(cid:133) The proposal/initiative relates to a new action following a pilot project/preparatory action45  

(cid:133) The proposal/initiative relates to the extension of an existing action  

(cid:133) The proposal/initiative relates to an action redirected towards a new action  

1.4. 

Objectives 

1.4.1.  The Commission's multiannual strategic objective(s) targeted by the proposal/initiative  

The  general  objectives  of  the  Market  Abuse  Regulation  and  Directive  are  to  increase 
market  integrity  and  investor  protection  by  prohibiting  those  who  possess  inside 
information  from  trading  in  related  financial  instruments,  and  by  prohibiting  the 
manipulation of financial markets through practices such as spreading false information or 
rumours  and  conducting  trades  which  secure  prices  at  abnormal  levels  while  ensuring  a 
single  rulebook  and  level  playing  field  and  increasing  the  attractiveness  of  securities 
markets for capital raising for issuers on SME growth markets.  

1.4.2. 

Specific objective(s) and ABM/ABB activity(ies) concerned  

Specific objective No.. 

In the light of the general objectives above, the following more specific policy objectives 
are relevant: 

- Ensure Regulation and Directive keep pace with market developments; 

- Ensure effective enforcement of market abuse rules; 

44 
45 

ABM: Activity-Based Management – ABB: Activity-Based Budgeting. 
As referred to in Article 49(6)(a) or (b) of the Financial Regulation. 

EN 

56 

   EN 

 
                                                 
-  Enhance  the  effectiveness  of  the  market  abuse  regime  by  ensuring  greater  clarity  and 
legal certainty; 

- Reduce administrative burdens where possible, especially for issuers on SME markets. 

ABM/ABB activity(ies) concerned 

The  specific  objectives  listed  above  require  the  attainment  of  the  following  operational 
objectives: 

- Prevent market abuse on organised markets, platforms & OTC transactions; 

- Prevent market abuse on commodities and related derivatives markets; 

- Ensure regulators have necessary information and powers to enforce effectively; 

- Ensure consistent, effective and dissuasive sanctions; 

- Reduce or eliminate options and discretions; 

- Clarify certain key concepts. 

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57 

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1.4.3.  Expected result(s) and impact 

Specify the effects which the proposal/initiative should have on the beneficiaries/groups targeted. 

The overall impact of the proposals will lead to considerable improvements in addressing 
market abuse  within the EU. First of all,  market integrity  and  investor  protection will be 
improved by clarifying which financial instruments and markets are covered, ensuring that 
instruments admitted to trading only on a MTF and other new types of organised trading 
facilities  are  covered.  In  addition  it  will  improve  protection  against  market  abuse  in 
commodity  derivatives  by  improved  market  transparency.  In  addition  they  will  ensure 
better detection of market abuse by offering the necessary powers to competent authorities 
to  perform  investigations  and  improve  the  deterrence  of  sanctioning  regimes  by 
introducing minimum principles for administrative measures of sanctions and requiring for 
the  introduction  of  criminal  sanctions.  Furthermore,  it  will  lead  to  a  more  coherent 
approach  regarding  market  abuse  by  reducing  options  and  discretions  for  member  States 
and will introduce a proportionate regime for issuers on SME growth markets. Overall, it is 
expected  to  contribute  to  the  improved  integrity  of  financial  markets  which  will  have  a 
positive  impact  on  investors'  confidence  and  this  will  further  contribute  to  the  financial 
stability of financial markets.  

1.4.4. 

Indicators of results and impact  

Specify the indicators for monitoring implementation of the proposal/initiative. 

The main indicators and sources of information that could be used in the evaluation are as 
follows: 

- Data from national competent authorities on the number of market abuse cases they have 
investigated and sanctioned; and 

- A report (which could be undertaken by ESMA) on the experience gained by regulators 
in enforcing the legislation. 

1.5. 

Grounds for the proposal/initiative  

1.5.1.  Requirement(s) to be met in the short or long term  

Short Term: 

- Ensure regulators have necessary information and powers to enforce effectively; 

- Ensure consistent, effective and dissuasive sanctions; 

- Reduce or eliminate options and discretions; 

- Clarify certain key concepts.  

Long Term:  

- Prevent market abuse on organised markets, platforms & OTC transactions; 

- Prevent market abuse on commodities and related derivatives markets. 

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1.5.2.  Added value of EU involvement 

Although all the problems outlined in the Impact Assessment have important implications 
for  each  individual  Member  State,  their  overall  impact  can  only  be  fully  perceived  in  a 
cross-border  context.  This  is  because  market  abuse  can  be  carried  out  wherever  that 
instrument is listed, or over the counter, so even in markets other than the primary market 
of the instrument concerned. Therefore there is a real risk of national responses to market 
abuse  being  circumvented  or  ineffective  in  the  absence  of  EU  level  action.  Further,  a 
consistent approach is essential in order to avoid regulatory arbitrage and since this issue is 
already  covered  by  the  acquis  of  the  existing  Market  Abuse  Directive  addressing  the 
problems highlighted in the Impact Assessment can best be achieved in a common effort.  

1.5.3.  Lessons learned from similar experiences in the past 

The proposal for this Regulation builds on the existing Market Abuse Directive which has 
shown  some  limits  in  its  application  and  has  been  applied  in  different  ways  among 
Member States leading to the need of a review in the form of a Regulation and a Directive.  

1.5.4.  Coherence and possible synergy with other relevant instruments 

As announced in its Communication of 2 June 2010 on Regulating Financial Services for 
Sustainable Growth,46 the Commission will complete its full financial reform programme 
in the coming months. Of the existing or pending proposals listed in the Communication, a 
number  are  related  to  this  initiative  and  will  contribute  to  achieving  its  objectives  of 
improving investor protection and enhancing market transparency and integrity. 

The proposal for a Regulation on short selling and certain aspects of Credit Default Swaps 
includes  a  short  selling  disclosure  regime  which  would  make  it  easier  for  regulators  to 
detect possible cases of market manipulation or insider dealing linked to short selling.47 

The  proposal  for  a  regulation  on  OTC  derivatives,  central  counterparties  and  trade 
repositories  will  also  increase  transparency  of  significant  positions  in  OTC  derivatives 
which will assist regulators to monitor for market abuse through the use of derivatives.48 

The  review  of  the  Markets  in  Financial  Instruments  Directive  will  consider  options  to 
widen the current scope of reporting in relation to transactions in instruments only traded 
on  multilateral  trading  facilities  (MTFs)  and  reporting  on  over  the  counter  (OTC) 
transactions  including  derivatives.  The  reporting  to  competent  authorities  of  OTC 
transactions in instruments not admitted to trading on  a regulated market is not currently 
mandatory,  and  such  reporting  would  make  it  easier  for  regulators  to  detect  possible 
market abuse through such instruments.49  

The issues of transparency requirements and manipulative behaviours specific to physical 
energy markets, as well as transaction reporting to ensure the integrity of energy markets, 

46 

47 

48 

49 

(COM  (2010)  301)  Communication  from  the  Commission  to  the  European  Parliament,  the  Council,  the 
European  Economic  and  Social  Committee  and  the  European  Central  Bank  regulating  financial  services  for 
sustainable growth, June 2010.  
(COM(2010) 482) Proposal for a Regulation of the European Parliament and of the Council on short selling 
and certain aspects of credit default swaps, September 2010.  
COM(2010)  484)  Proposal  for  a  Regulation  of  the  European  Parliament  and  of  the  Council  on  OTC 
derivatives, central counterparties and trade repositories, September 2010.  
(COM(2011) XXX)  

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59 

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are  the  subject  of  the  Commission  proposal  for  a  Regulation  on  energy  market  integrity 
and transparency.50 

50 

COM(2010) 484) Proposal for a Regulation of the European Parliament and of the Council on energy market 
integrity and transparency, December 2010.  

EN 

60 

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1.6. 

Duration and financial impact  

(cid:133) Proposal/initiative of limited duration  

–  (cid:133)  Proposal/initiative in effect from [DD/MM]YYYY to [DD/MM]YYYY  

–  (cid:133)  Financial impact from YYYY to YYYY  

(cid:58) Proposal/initiative of unlimited duration 

–  Implementation with a start-up period from YYYY to YYYY, 

–  followed by full-scale operation. 

1.7.  Management mode(s) envisaged51  

(cid:58) Centralised direct management by the Commission  

(cid:133) Centralised indirect management with the delegation of implementation tasks to: 

–  (cid:133)  executive agencies  

–  (cid:133)  bodies set up by the Communities52  

–  (cid:133)  national public-sector bodies/bodies with public-service mission  

–  (cid:133)  persons entrusted with the implementation of specific actions pursuant to Title V of 
the  Treaty  on  European  Union  and  identified  in  the  relevant  basic  act  within  the 
meaning of Article 49 of the Financial Regulation  

(cid:133) Shared management with the Member States  

(cid:133) Decentralised management with third countries  

(cid:133) Joint management with international organisations (to be specified) 

If more than one management mode is indicated, please provide details in the "Comments" section. 

Comments  

// 

51 

52 

Details of management modes and references to the Financial Regulation may be found on the BudgWeb site: 
http://www.cc.cec/budg/man/budgmanag/budgmanag_en.html 
As referred to in Article 185 of the Financial Regulation. 

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2. 

MANAGEMENT MEASURES  

2.1.  Monitoring and reporting rules  

Specify frequency and conditions. 

Article  81  of  the  Regulation  establishing  the  European  Securities  and  Markets  Authority 
provides  for  evaluation  of  the  experience  acquired  as  a  result  of  the  operation  of  the 
Authority  within  three  years  from  the  effective  start  of  its  operation.  To  this  end,  the 
Commission  shall  publish  a  general  report  that  shall  be  forwarded  to  the  European 
Parliament and to the Council.  

2.2.  Management and control system  

2.2.1.  Risk(s) identified  

An Impact Assessment has been carried out for the reform the financial supervision system 
in the EU to accompany the Regulations establishing the European Banking Authority, the 
European  Insurance  and  Occupational  Pensions  Authority  and  the  European  Securities 
Markets Authority.  

The additional resource to ESMA foreseen as a result of the current proposals is needed in 
order to allow ESMA to carry out its competences.  

1. 

ESMA will ensure harmonization and coordination of rules in respect of: 

- Exemption for buy-back programmes and stabilization (Article 3);  

-  Technical  arrangements  for  the  detection  and  notification  of  suspicious  transactions 
(Article 11);  

- Technical means for appropriate public disclosure of inside information (Article 12);  

- Technical means for delaying the public disclosure of inside information (Article 12);  

-  An  indicative  and  non-exhaustive  list  of  events  relating  to  issuers  whose  financial 
instruments  are  admitted  to  trading  on  an  SME  market  that  might  constitute  inside 
information (Article 12);  

- Content and format of insider lists (Article 13);  

- Arrangements relating to investment recommendations and statistics (Article 15);  

- Procedures and forms for exchange of information among EU and foreign competent and 
regulatory authorities (Articles 18, 19, 20, 29).  

2.  Moreover,  if  requested  by  one  competent  authority  ESMA  will  coordinate 
investigations  and  inspections  among  competent  authorities  for  cross-border  cases  of 
market abuse (Article 19).  

3. 
ESMA  will  also  coordinate  the  development  of  cooperation  arrangements  between 
the competent authorities of Member States and the relevant competent authorities of third 
countries. ESMA will prepare template documents for cooperation arrangements that may 

EN 

62 

   EN 

 
be  used  by  competent  authorities.  ESMA  will  also  coordinate  the  exchange  between 
authorities  of  information  obtained  from  competent  authorities  of  third  countries  (Article 
20).  

4. 
Finally, in relation to derivatives on commodities, ESMA will perform a facilitation 
and coordination role for the cooperation and exchange of information between competent 
authorities  and  regulatory  authorities  in  other  Member  States  and  third  countries 
responsible for the spot markets (Article 19).  

The lack of this resource could not ensure a timely and efficient fulfilment of the role of 
the Authority.  

2.2.2.  Control method(s) envisaged  

Management and control systems as provided for in the ESMA Regulation will apply also 
with  regard  to  the  role  of  ESMA  according  to  the  present  proposal.  The  final  set  of 
indicators to assess the performance of the European Securities and Markets Authority will 
be decided by the Commission at the time of conducting the first required evaluation. For 
the  final  assessment,  the  quantitative  indicators  will  be  as  important  as  the  qualitative 
evidence gathered in the consultations. The evaluation shall be repeated every three years. 

2.3.  Measures to prevent fraud and irregularities  

Specify existing or envisaged prevention and protection measures. 

For  the  purposes  of  combating  fraud,  corruption  and  any  other  illegal  activity,  the 
provisions  of  Regulation  (EC)  No  1073/1999  of  the  European  Parliament  and  of  the 
Council of 25 May 1999 concerning investigations conducted by the European Anti-Fraud 
Office (OLAF) shall apply to the ESMA without any restriction. 

The Authority shall accede to the Inter-institutional Agreement of 25 May 1999 between 
the European Parliament, the Council of the European Union and the Commission of the 
European  Communities  concerning  internal  investigations  by  the  European  Anti-Fraud 
Office  (OLAF)  and  shall  immediately  adopt  appropriate  provisions  for  all  staff  of  the 
Authority. 

The  funding  decisions  and  the  agreements  and  the  implementing  instruments  resulting 
from them shall explicitly stipulate that the Court of Auditors and OLAF may, if need be, 
carry out on-the-spot checks on the beneficiaries of monies disbursed by the Authority as 
well as on the staff responsible for allocating these monies. 

EN 

63 

   EN 

 
3. 

ESTIMATED FINANCIAL IMPACT OF THE PROPOSAL/INITIATIVE  

3.1. 

Heading(s)  of  the  multiannual  financial  framework  and  expenditure  budget  line(s) 
affected  

•  Existing expenditure budget lines  

In order of multiannual financial framework headings and budget lines. 

Budget line 

Type of  
expenditure

Contribution  

Number  
[Description………………………...……….] 

Diff./non-
diff 
(53) 

from 
EFTA54 
countries 

from 
candidate 
countries55 

from third 
countries 

within the meaning 
of Article 18(1)(aa) 
of the Financial 
Regulation  

12.040401.01 

ESMA – Subsidy under Titles 1 and 2 
(Staff and administrative expenditure) 

•  New budget lines requested  

Diff. 

YES 

NO 

NO 

NO 

In order of multiannual financial framework headings and budget lines. 

Heading of 
multiannual 
financial 
framework 

///

53 
54 
55 

Diff. = Differentiated appropriations / Non-Diff. = Non-differentiated appropriations 
EFTA: European Free Trade Association.  
Candidate countries and, where applicable, potential candidate countries from the Western Balkans. 

EN 

64 

   EN 

 
 
                                                 
3.2. 

Estimated impact on expenditure  

3.2.1. 

Summary of estimated impact on expenditure  

Heading of multiannual financial 
framework:  

1A 

Competitiveness for Growth and Employment  

EUR million (to 3 decimal places) 

DG: <MARKT> 

(cid:121) Operational appropriations  

12.0404.01 

of 

Appropriations 
administrative 
from the envelope for specific programmes57  
Number of budget line 

an 

TOTAL appropriations 
for DG MARKT 

Year 
201356 

Year 
2014 

Year 
2015 

TOTAL 

Commitments 

Payments 

(1) 

(2) 

0,179 
0,179 

0,327 
0,327 

0,327 
0,327 

nature 

financed 

Commitments 

(3) 

=1+1a 
+3 

=2+2a 

0 

0 

0 

0,179 

0,327 

0,327 

Payments 

0,179 

0,327 

0,327 

0.832 
0.832 

0.832 

0.832 

(cid:121) TOTAL operational appropriations  

Commitments 

Payments 

+3 

(4) 

(5) 

0 

0 

0 

0 

0 

0 

56 
57 

EN 

Year N is the year in which implementation of the proposal/initiative starts. 
Technical and/or administrative assistance and expenditure in support of the implementation of EU programmes and/or actions (former "BA" lines), indirect research, direct 
research. 

65 

EN 

 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                 
(cid:121)  TOTAL  appropriations  of  an  administrative  nature 
financed from the envelope for specific programmes  

(6) 

0 

0 

0 

TOTAL appropriations  
under HEADING 1A 
of the multiannual financial framework 

Commitments 

=4+ 6 

0,179 

0,327 

0,327 

Payments 

=5+ 6 

0,179 

0,327 

0,327 

0.832 

0.832 

1. 

ESMA will have to draft a certain number of draft implementing technical standards in respect of:  

–  Exemption for buy-back programmes and stabilization (Article 3);  

–  Technical arrangements for the detection and notification of suspicious transactions (Article 11);  

–  Technical means for appropriate public disclosure of inside information (Article 12);  

–  Technical means for delaying the public disclosure of inside information (Article 12);  

–  An indicative and non-exhaustive list of events relating to issuers whose financial instruments are admitted to trading on an SME market 

that might constitute inside information (Article 12);  

–  Content and format of insider lists (Article 13);  

–  Arrangements relating to investment recommendations and statistics (Article 15);  

–  Procedures and forms for exchange of information among EU and foreign competent and regulatory authorities (Articles 18, 19, 20, 29).  

If requested by one competent authority ESMA will coordinate investigations and inspections among competent authorities for cross-border 

cases of market abuse.  

ESMA  will  coordinate  the  development  of  cooperation  arrangements  between  the  competent  authorities  of  Member  States  and  the  relevant 
competent  authorities  of  third  countries.  ESMA  will  prepare  template  documents  for  cooperation  arrangements  that  may  be  used  by 
competent authorities. ESMA will also coordinate the exchange between authorities of information obtained from competent authorities of 
third countries.  

66 

EN 

2. 

3. 

EN 

 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
4. 

4. 

In relation to derivatives on commodities, ESMA will perform a facilitation and coordination role for the cooperation and exchange of 
information  between  competent  authorities  and  regulatory  authorities  in  other  Member  States  and  third  countries  responsible  for  the  spot 
markets.  

If more than one heading is affected by the proposal / initiative: 

(cid:121) TOTAL operational appropriations  

Commitments 

Payments 

(cid:121)  TOTAL  appropriations  of  an  administrative  nature 
financed from the envelope for specific programmes  

(4) 

(5) 

(6) 

TOTAL appropriations  
under HEADINGS 1 to 4 
of the multiannual financial framework 
(Reference amount) 

Commitments 

=4+ 6 

0,179 

0,327 

0,327 

Payments 

=5+ 6 

0,179 

0,327 

0,327 

0.832 

0.832 

EN 

67 

EN 

 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Heading of multiannual financial 
framework:  

5 

" Administrative expenditure " 

DG: <…….> 

(cid:121) Human resources  
(cid:121) Other administrative expenditure  

TOTAL DG <…….> 

Appropriations  

Year 
2013 

Year 
2014 

Year 
2015 

0 

0 

0 

0 

0 

0 

TOTAL appropriations 
under HEADING 5 
of the multiannual financial framework  

(Total 
= Total payments) 

commitments 

0 

0 

0 

TOTAL appropriations  
under HEADINGS 1 to 5 
of the multiannual financial framework  

Commitments 

0,179 

0,327 

0,327 

Payments 

0,179 

0,327 

0,327 

Year 
201358 

Year 
2014 

Year 
2015 

EUR million (to 3 decimal places) 

TOTAL 

EUR million (to 3 decimal places) 

TOTAL 

0.832 

0.832 

58 

Year N is the year in which implementation of the proposal/initiative starts. 

EN 

68 

EN 

 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                 
3.2.2.  Estimated impact on operational appropriations  

–  (cid:133)  The proposal/initiative does not require the use of operational appropriations  

–  (cid:58)  The proposal/initiative requires the use of operational appropriations, as explained below: 

The  specific  objectives  of  the  proposal  are  set  out  under  1.4.2.  They  will  be  reached  through  the  legislative  measures  proposed,  to  be 
implemented at national level, and through the involvement of the European Securities and Markets Authority.  

In particular, although it is not possible to attribute concrete numerical outputs to each operational objective, ESMA role, coupled with new powers for 
national regulators, should contribute to increasing market integrity and investor protection by prohibiting those who possess inside information from 
trading in related financial instruments, and by prohibiting the manipulation of financial markets through practices such as spreading false information 
or  rumours  and  conducting  trades  which  secure  prices  at  abnormal  levels.  This  new  framework  will  prevent  market  abuse  on  organised  markets, 
platforms & OTC transactions, and on commodities and related derivatives markets. Moreover, it will ensure ESMA and the national regulators have 
sanctions. 
necessary 

information 

consistent, 

dissuasive 

effective 

enforce 

powers 

and 

and 

to 

EN 

69 

EN 

 
  
3.2.3.  Estimated impact on appropriations of an administrative nature 

3.2.3.1.  Summary  

–  (cid:58)  The  proposal/initiative  does  not 

require 

the  use  of  administrative 

appropriations  

–  (cid:133)  The  proposal/initiative  requires  the  use  of  administrative  appropriations,  as 

explained below: 

EN 

70 

   EN 

 
3.2.3.2.  Estimated requirements of human resources  

–  (cid:58)  The proposal/initiative does not require the use of human resources  

–  (cid:133)  The  proposal/initiative  requires  the  use  of  human  resources,  as  explained 

below: 

Comment: 

No additional human and administrative resources will be needed in DG MARKT as a result 
of the proposal. Resources currently deployed to follow the MAD will continue to do so. 

EN 

71 

   EN 

 
3.2.4.  Compatibility with the current multiannual financial framework  

–  (cid:133)  Proposal/initiative is compatible the current multiannual financial framework. 

–  (cid:58)  Proposal/initiative  will  entail  reprogramming  of  the  relevant  heading  in  the 

multiannual financial framework. 

The proposal provides for extra tasks to be carried out by ESMA. This will require additional resources under 
budget line 12.0404.01 

–  (cid:133)  Proposal/initiative requires application of the flexibility instrument or revision of the 

multiannual financial framework59. 

Explain what is required, specifying the headings and budget lines concerned and the corresponding amounts. 

3.2.5.  Third-party contributions  

–  (cid:133)  The proposal/initiative does not provide for co-financing by third parties  

–  (cid:58)  The proposal/initiative provides for the co-financing estimated below: 

Appropriations in EUR million (to 3 decimal places) 

Year 
2013 

Year 
2014 

Year 
2015 

0,268 

0,490 

0,490 

0,268 

0,490 

0,490 

Specify  the  co-financing 
body  

Member  States  via  EU 
national supervisors (*) 

TOTAL appropriations 
cofinanced  

Total 

1,248 

1,248 

(*) Estimation based on current financing mechanism in draft ESMA regulation (Member States 60% - 
Community 40%). 

59 

See points 19 and 24 of the Interinstitutional Agreement. 

EN 

72 

   EN 

 
 
 
 
 
 
 
 
 
 
 
 
 
                                                 
3.3. 

Estimated impact on revenue  

–  (cid:58)  Proposal/initiative has no financial impact on revenue. 

–  (cid:133)  Proposal/initiative has the following financial impact: 

• 

• 

(cid:133) 

(cid:133) 

on own resources  

on miscellaneous revenue  

Annex to Legislative Financial Statement for proposal for a Regulation of the European Parliament 
and of the Council on insider dealing and market manipulation (market abuse) and for a Directive of 
the  European  Parliament  and  of  the  Council  on  criminal  sanctions  for  insider  dealing  and  market 
manipulation (market abuse).  

Applied methodology and main underlying assumptions 

The costs related to tasks to be carried out by ESMA stemming from the two proposals have been 
estimated  for  staff  expenditure  (Title  1),  in  conformity  with  the  cost  classification  in  the  ESMA 
draft budget for 2012 submitted to the Commission.  

The two proposals of the Commission include provisions for ESMA to develop some 11 sets of new 
binding technical standards (BTS) that should ensure that provisions of highly technical nature are 
consistently implemented across the EU. According to the proposals, ESMA is expected to deliver 
the  new  BTS  24  months  after  entry  into  force  of  the  Regulation.  To  meet  this  goal,  increase  in 
staffing  level  is  required  already  starting  with  2013.  As  regards  the  nature  of  positions,  the 
successful and timely delivery of new BTS will require, in particular, additional policy, legal and 
impact assessment officers.  

Based  on  the  estimates  of  the  Commission  services  and  ESMA,  the  following  assumptions  were 
applied  to  assess  the  impact  on  number  of  FTEs  required  to  develop  BTS  related  to  the  two 
proposals: 

- One policy officer, one impact assessment officer, and one legal officer are needed by 2013.  

Hence,  delivery  of  BTS  that  are  falling  due  24  months  after  entry  into  force  of  the  Regulation 
requires 3 FTEs.  

Lastly ESMA would be entrusted with some permanent tasks in the field of: 

- coordination of investigations and inspections among competent authorities for cross-border cases 
of market abuse; 

-  development  of  cooperation  arrangements  between  the  competent  authorities  of  Member  States 
and the relevant competent authorities of third countries. ESMA will prepare template documents 
for  cooperation  arrangements  that  may  be  used  by  competent  authorities.  ESMA  will  also 
coordinate the exchange between authorities of information obtained from competent authorities of 
third countries;  

-  facilitation  and  coordination  role  for  the  cooperation  and  exchange  of  information  between 
competent  authorities  and  regulatory  authorities  in  other  Member  States  and  third  countries 
responsible for the spot markets and emission allowances.  

EN 

73 

   EN 

 
Overall this means an additional 6 FTEs are needed. 

Other assumptions:  

– 

– 

– 

– 

– 

– 

based  on  the  distribution  of  FTEs  in  2012  draft  budget,  additional  6  FTEs  are 
assumed  to  be  comprised  of  3  temporary  agents  (50%),  2  seconded  national  expert 
(33,3%) and 1 contractual agent (16.7%);  

average  annual  salary  costs  for  different  categories  of  personnel  are  based  on  DG 
BUDG guidance; 

salary weighting coefficient for Paris of 1.27; 

training costs assumed at €1,000 per FTE per year;  

mission  costs  of  €10,000,  estimated  based  on  2012  draft  budget  for  missions  per 
headcount; 

recruiting-related  costs  (travel,  hotel,  medical  examinations,  installation  and  other 
allowances, removal costs, etc) of €12,700, estimated based on 2012 draft budget for 
recruiting per new headcount.  

It  was  assumed  that  the  workload  behind  the  above  increase  in  FTEs  will  be  maintained  in  2014 
onwards, and is linked to amending the already developed BTS.  

The method of calculating the increase in the required budget for the next three years is presented in 
more detail in table below. The calculation reflects the fact that that the Community budget funds 
40% of the costs. 

Cost type 

Calculation 

Amount (in thousands) 

2013 

2014 

2015 

Total 

Title 1: Staff expenditure 

6 Salaries and allowances 
- of which temporary agents 
- of which SNEs 
- of which contract agents 

6 Expenditure related to recruitment 

6 Mission expenses 

6 Training 

=3*127*1,27
=2*73*1,27 
=1*64*1,27 

241.93
92.71
40.64

483.87 
185.42 
81.28 

483.87
185.42
81.28

1209.67
463.55
203.2

=6*12,7 

76.2   

=6*10 

=6*1 

30

3

60 

6 

60

6

76.2

150

15

Total Title 1: Staff expenditure 

484.48

816.57 

816.57

2079.53

Of which Community contribution (40%) 
Of which Member State contribution (60%) 

193.79
290.68

326.63 
489.94 

326.63
489.94

847.05
1270.56

The  following  table  presents  the  proposed  establishment  plan  for  the  three  temporary  agent 
positions: 

EN 

74 

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Function Group and 
Grade 

Temporary 
Posts 

AD16 
AD15 
AD14 
AD13 
AD12 
AD11 
AD10 
AD9 
AD8 
AD7 
AD6 
AD5 

AD Total 

1 

2 

3 

EN 

75 

   EN