CELEX: 51987PC0111
Language: en
Date: 1987-05-21
Title: PROPOSAL FOR A COUNCIL DIRECTIVE COORDINATING REGULATIONS ON INSIDER TRADING

No C 153/8                               Official Journal of the European Communities                                  11.6.87
                          Article 4                                 2.    In requesting the opinion of the Committees
1.    Where the procedure set out in this Article is to be          mentioned in paragraph 1, the Commission may fix a
followed, the Standing Veterinary Committee, instituted             time limit within which this opinion shall be delivered.
by Council Decision 68/361 / E E C (') and the CADDIA
Steering Committee, instituted by Council Decision
85/214/EEC (2), shall give an opinion on matters                    The deliberations of these Committees shall not be
referred to them by the Commission.                                 followed by a vote. However, each member of the
                                                                    Committees may demand that his opinion be recorded in
                                                                    the minutes.
(») OJ.No L 255, 18. 10. 1968, p. 23.
O OJ No L 96, 3. 4. 1985, p. 35.
                         Proposal for a Council Directive coordinating regulations on insider trading
                                                       COM(87) 111 final
                                 (Submitted by the Commission to the Council on 25 May 1987)
                                                         (87/C 153/09)
THE COUNCIL OF THE EUROPEAN COMMUNITIES,                            Whereas insider trading, by benefiting certain investors
                                                                    at the expense of others, is likely to undermine that
Having regard to the Treaty establishing the European               confidence and may therefore prejudice the smooth
Economic Community, and in particular Article 54                    operation of the secondary market in transferable
thereof,                                                            securities;
                                                                    Whereas it is therefore necessary to take all appropriate
Having regard to the proposal from the Commission,                  measures to combat insider trading;
Having regard to the opinion of the European Par-                   Whereas in most Member States there are no rules or
liament,                                                            regulations prohibiting insider trading; whereas the rules
                                                                    or regulations that do exist differ appreciably between
Having regard to the opinion of the Economic and                    Member States;
Social Committee,
                                                                    Whereas it is therefore necessary to adopt coordinated
                                                                    Community rules in this field;
Whereas Article 54 (3) (g) provides that the Council shall
coordinate to the necessary extent the safeguards which,            Whereas such coordinated rules also have the advantage
for the protection of the interests of members and others,          of helping, through cooperation between the competent
are required by Member States of companies or firms                 authorities, to combat transfrontier insider trading more
within the meaning of the second paragraph of Article 58            effectively,
with a view to making such safeguards equivalent
throughout the Community;
                                                                    HAS ADOPTED THIS DIRECIWE:
Whereas the secondary market in transferable securities
plays an important role in the financing of undertakings;                                     Article 1
                                                                     1.    Member States shall prohibit any person who, in
Whereas, for it to be able to play that role effectively,           the exercise of his profession or duties, acquires inside
every possible measure should be taken to ensure that               information as defined in Article 6 from taking
that market operates smoothly;                                      advantage of that information to buy or sell on their
                                                                    territory, either directly or through another person,
Whereas the smooth operation of the secondary market                transferable securities admitted to trading on their stock
depends to a large extent on the confidence it inspires in          exchange markets.
investors;
                                                                    Where the purchase or sale of transferable securities is
                                                                    carried out on a stock exchange market, it shall be
Whereas one of the factors on which such confidence                 deemed to be carried out on the territory of the Member
depends is the assurances afforded to investors that they           State in which the stock exchange in question is situated
are placed on an equal footing;                                     or operates.
 ---pagebreak---  M.D.^                                              official ]ournal of the European Communities                                             ^ooer^B^
^ h e r e the purchase or sale of transferable securities is
 carriedoutoutsideastocke^chan^emarket,itshallbe
 deemed to be carried out on the territory of the member                        Por the purposes of thisPOirective, inside information is
 ^ t a t e i n w h i c h t h e counterpart of the person referredto             information unknown to t h e p u b l i c o f a s p e c i f i c n a t u r e
 in the first subparagraph is resident.                                         and relating to one or more issuers of transferable
                                                                                securities, or to one or more transferable securities,
                                                                               which, if it were published, would be likely to have a
 ^.       The prohibition laid down in paragraph I s h a l l n o t              material effect on the price of the transferable security of
 apply totransferablesecuritiesbou^ht or s o l d o u t s i d e a                transferable securities in question.
stock e^chan^e market without the involvement of a
professional intermediary.
                                                                                P       Issuers whose transferable securities are admitted to
                                                                               official listing in one or more member states or are
                                                                               traded there on another stock e^chan^e market shall
member states shall prohibit any p e r s o n w h o i s resident                immediately i n f o r m t h e p u b l i c i n t h a t ^ i e m b e r ^ t a t e o r
on their territory and who acquires inside information in                      those member states of any circumstance or decision
the exercise of his profession or duties from^                                 which w o u l d b e likely t o h a v e a m a t e r i a l e f f e c t o n the
                                                                               price of such transferable securities.
— disclosing that inside information to a third party
       unless such disclosure is made in the normalcourse                      ^.       ^ h e r e an issuer is unable to inform the public
       of e^ercisin^ his profession or duties,                                 immediately ofacircumstance or decision as referred to
                                                                               in paragraph ^ because disclosure would prejudice its
                                                                               legitimate interests, it shall immediately inform the
— usin^ that inside information to recommend a third
                                                                               competent authorities thereof, w h o m a y r e l i e v e i t of the
      party to buy or sell transferable securities admitted to
                                                                               obligation provided for in para^raphP
      trading on their stock e^chan^e markets.
                                                                                P       member states shall designate the authority or
t.        member states shall impose the prohibition                           authorities competent to ensure that the provisions
provided for in Article 1 in accordance with the terms                         adopted pursuant to this Poirective are applied. They
referred to therein also on any person who has                                 shall inform the commission accordingly, indicating, if
knowingly obtained inside information from a person                            appropriate, how duties have been allocated.
w h o h a s acquired that information i n t h e exercise of his
profession or duties.
                                                                               ^.       The competent authorities shall be ^iven all such
                                                                               supervisory powersas may benecessary for the exercise
                                                                               of their duties.
^         member states shall prohibit any person referred to
in paragraphia
                                                                               ^.      The competent authorities in the member states
                                                                               shall cooperate wherever necessary for the purpose of
— from disclosing the inside information to a third                            carryin^out their duties and shall e^chan^e any inform
      party,
                                                                               mation required for that purpose.
— from usin^ that inside information to recommend a
      third party to buy or sell transferable securities
       admitted to trading on their stock e^chan^e markets.                     t.      member states shall provide that all persons
                                                                               employed or formerly employed by the competent authD
                                                                               orities referred to in Article ^ shall be bound by pro
                                                                               fessional secrecy. Information covered by professional
                                                                               s e c r e c y m a y n o t b e d i v u l ^ e d t o any personor authority
member states may lay down more stringent rules than                           except by virtue of provisions laid down by law.
t h o s e c o n t a i n e d i n t h i s Mi^ectiveprovidedthatthey are
nondiscriminatory.
                                                                               ^.       Para^raphlshall not, however, preclude e^chan^es
                                                                               of information between the various member states by
                                                                               the authorities referred to in A r t i c l e ^ a s provided for in
                                                                               this P^irective. Information thus e^chan^ed shall be
Por theput^posesof thisMirectivetransferablesecurities                         covered by the obligation of professional secrecy to
shall include not only securities usually traded on the                        which the persons employed or formerly employed by
stock e^chan^e market such as shares and debt securities                       the competent authorities receiving the information are
but also traded options Telatin^ to such securities.                           subject.
 ---pagebreak--- No C 153/10                             Official Journal of the European Communities                                 11.6.87
3.    Without prejudice to cases falling under criminal            (b) to advise the Commission on any amendments to be
law, the authorities referred to in Article 8 which receive             made to this Directive.
information may use it only for the exercise of their
duties and in connection with administrative or judicial                                    Article 11
proceedings specifically relating to the exercise of those         Member States shall determine the penalties to be
duties.                                                            applied for infringement of the measures taken pursuant
                                                                   to this Directive.
                         Article 10
                                                                                            Article 12
The Contact Committee set up by Article 20 of Council
                                                                   1.    Member States shall take the measures necessary to
Directive 79/279/EEC of 5 March 1979 coordinating
                                                                   comply with this Directive not later than 31 December
the conditions for the admission of securities to official
                                                                   1990. They shall forthwith inform the Commission
stock exchange listing (') shall also have as its function:
                                                                   thereof.
(a) to facilitate the harmonized implementation of this            2.    Member States shall communicate to the
    Directive through regular consultations on any                 Commission the provisions of national law which they
    practical problems which arise from its application            adopt in the field governed by this Directive.
    and on which exchanges of view are deemed useful;
                                                                                            Article 13
O OJ No L 66, 16. 3. 1979, p. 21.                                  This Directive is addressed to the Member States.