EUROPEAN UNION – The European Commission (EC) has presented its proposals for a directive on insider dealing and market manipulation.

However, in a response to the Commission’s proposals, European Monetary Affairs Committee (EMAC) chair, Christa Randzio-Plath, says agreement with the Commission still needs to be reached if a verdict is to be given according to the Lamfalussy approach to securities regulation.
“ As demonstrated by the proposals outlined in our letter of 19 April, the European Parliament is ready to open wide the window for co-operation, but in the absence of a constructive response from the commission, the Treaty prevails.
“ These proposals will be the subject of a preliminary discussion at our meeting (EMAC) of 19-20 June.”

The directive initiative is one of the central pieces of the commission’s financial services action plan, and the drive to create an integrated services market by 2003.

The grand architect of the plan, internal market commissioner Frits Bolkestein, comments: “Let me be clear: the European Union has no truck with greedy financial cheats.
“ This proposal is an important step towards ensuring stable, transparent, integrated and efficient European markets for the benefit of every consumer and investor.”

Given the recent changes in European financial markets the decade old Insider Dealing Directive (89/592/EEC) is being integrated with market manipulation in the new proposal.

To avoid further changes in a developing market environment, says the commission, the proposal provides for a general definition of what constitutes market abuse. The proposal also foresees that member states designate a single administrative regulatory and supervisory authority with a common minimum set of responsibilities to tackle insider trading and market manipulation.

As one of the first proposals for a directive, the market abuse regulation is a stepping-stone for the earlier Lamfalussy report.
“ In order for the Lamfalussy approach to be successfully applied, we need to reach an agreement with the commission before the Göteborg Gothenburg summit, as requested by ECOFIN on 7 May,” says Randzio-Plath.

Under the EC financial services action plan a single investor prospectus directive is also being proposed. This would introduce a union-wide “single passport for issuers,” so that once a prospectus has been approved by one member state it has to be accepted throughout the EU for public offer and admission to trading on regulated markets.
Says Bolkestein: “ This proposal would make it considerably easier and cheaper for companies of all sizes to raise capital across frontiers in Europe.”