Lithuanian Presidency reaches political agreement on Market Abuse Directive

20 December 2013, Last updated at, 19:08 EET
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author: PantherMedia/Scanpix

European Union Permanent Representatives Committee (COREPER II) on December 20 in Brussels has approved the agreement with the European Parliament on the Directive on criminal sanctions for insider dealing and market manipulation (MAD) which aims to penalise market abuse and complements the Market Abuse Regulation (MAR) providing for administrative sanctions in the same area.

“It is a very important legal instrument of the European Union for the protection of market integrity. It will safeguard the smooth functioning of financial markets and ensure public confidence in securities, adding to economic growth and prosperity in Europe. The Lithuanian Presidency has also invested much effort in the related MiFID and MiFIR dossiers and nearly brought them to conclusion. We are sure that the incoming Greek Presidency will be able to finalize the work very soon for the entire package to enter into force at the same time,” said ambassador Raimundas Karoblis, chair of the Permanent Representatives Committee.

The main points of agreement include levels of criminal sanctions, liability of legal persons and jurisdiction. The co-legislators agreed that the most serious market abuse should be punished by a maximum term of imprisonment of at least four years and of at least two years for other, less serious violations. The imposition of criminal sanctions for market abuse offences will have an increased deterrent effect on potential offenders. Among dissuasive measures for future market abuse incidents, the Directive provides for a possibility of the publication of the final decision on sanction for legal person.

The proposal for Market Abuse Directive was presented by the Commission on October 21, 2011 and the EU Justice Ministers reached an agreement on the proposal on December 7, 2012. After an initial political meeting on MAD and MAR in January this year, the MAD dossier was in a deadlock till the progress on MAR was made. As an agreement on MAR was reached between the Council and the European Parliament in June 2013, the Lithuanian Presidency has engaged in intensive negotiations with the European Parliament on the text of the Market Abuse Directive.

After just three political meetings, the Lithuanian Presidency reached a preliminary compromise with the European Parliament on the main elements of the Directive on December 10 which was confirmed by the Permanent Representatives Committee today.

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