REGULATION OF THE EUROPEAN SECURITIES
Draft Directive on insider dealing and market manipulation (market abuse).
|Legal base:||Article 95 EC; co-decision; qualified majority voting
|Deposited in Parliament:||20 June 2001
|Basis of consideration:||Minister's letter of 11 February 2002
|Previous Committee Report:||HC 152-ix (2001-02), paragraph 2 (5 December 2001)
|Discussed in Council:||No date set
|Committee's assessment:||Legally and politically important
|Committee's decision:||Cleared, but request to be kept informed
16.1 On 5 December, we left uncleared two documents relating
to the regulation of the European securities markets, pending
receipt of further information. The first document covered new
public issues of securities to be issued throughout the EU on
the basis of a single prospectus instead of prospectuses being
produced to satisfy up to 15 different sets of regulations; the
second document covered EU common standards against market abuse.
The documents were especially important because they were the
first pieces of draft legislation from the Commission to follow
the streamlined process for approving by the end of 2003 legislation
on financial regulation as recommended by the Lamfalussy Committee.
The Minister's letter
16.2 In her letter of 11 February 2002, the Economic
Secretary to the Treasury (Ruth Kelly) updates the Committee on
the Directive on insider dealing and market manipulation (market
abuse). She says that the negotiations have made rapid progress
and mentions that changes to the text enabled the Government to
support an agreement on a general orientation in respect of the
Directive at ECOFIN on 13 December. She adds that these changes
covered the definition of market manipulation in Article 1 and,
in the Government's view, provided a balanced interpretation that
would be effective in tackling market abuse without hampering
legitimate activity. The other change related to the territoriality
provisions in Article 10 and the cooperation procedures
in Article 16, which were amended to permit countries where there
had been market abuse to take action against an alleged abuser
regardless of the location and to encourage cooperation
between national regulators.
16.3 The Minister also notes that reports made following
the attacks of 11 September that terrorists had benefited financially
by manipulating financial markets proved to be unfounded.
16.4 In December we expressed concern about the Lamfalussy
procedures having the potential to allow poorly-drafted legislation
to be adopted without adequate consultation and reflection. We
also requested an update on negotiations. The Minister has replied
with information on the latest developments concerning the market
abuse directive. We are pleased that the negotiations have made
rapid progress and a number of the concerns have been addressed.
16.5 We thank the Minister for her further information.
We clear the document, but we ask her to keep us informed of developments.
A description of the legislative structure recommended by the
Lamfalussy report was published in our Report of 5 December 2001:
(22467) 9674/01, (22473) 9763/01; see HC 152-ix (2001-02), paragraph
2. The Lamfalussy report was published in February 2001 and was
cleared by us on 18 July 2001: (22154) 6554/01; see HC 152-i (2001-02),
paragraph 24. Back