Brussels, 08/01/2004 (Agence Europe) - The European Commission has adopted three implementing measures related to the directive on insider dealing and market manipulation ("market abuse" directive - 2003/6/EC). These measures mainly cover detailed criteria for determining what constitutes inside information, which non exhaustive factors have to be examined when assessing possible market manipulation as well as provisions on how and when issuers must disclose inside information. They also set out standards for the fair presentation of investment recommendations (including the disclosure of conflicts of interest). Finally, they set out conditions for benefiting from exemptions from the prohibitions of market abuse in the case of share buy-back programmes and price stabilisation of financial instruments. These implementing measures are the first to be drawn up under the new procedure for deciding and applying securities legislation agreed by the European Council in March 2001 and endorsed by the European Parliament in February 2002.
The three implementing measures comprise two Commission directives and one Commission regulation. The first directive establishes detailed criteria for determining when inside information is precise and price sensitive. Also, it specifies a series of factors to be taken into account when examining whether specific behaviour might constitute market manipulation. It sets out the means and time-frame for the public disclosure of inside information and details circumstances under which issuers would be able to delay such disclosure in order to protect their legitimate interests.
The second directive establishes standards for the fair presentation of investment recommendations and the disclosure of conflicts of interest. It makes a distinction between those producing investment recommendations (who must conform to higher standards) and those merely disseminating investment recommendation produced by a third party. In conformity with the Market Abuse Directive, this second implementing directive takes account of rules, including self-regulation, governing the profession of journalist. This means that the very specialised sub-category of financial journalists recommending or disseminating investment recommendations would have to comply with certain general principles. However, this is subject to safeguards and allows for use of self-regulatory mechanisms to determine how these basic principles should be applied. The Commission finds this "balanced solution which fully protects press freedom while also shielding investors and issuers against any risk of market manipulation by journalists exploiting for personal gain their sometimes considerable ability to influence prices".
Finally, the Commission regulation establishes technical conditions for share buy-back programmes and price stabilisation of financial instruments.
In preparing the above measures, the Commission has taken into account the technical opinion of the Committee of European Securities Regulators (CESR). On 20 November 2003, the European Parliament said the implementing measures approved by the European Securities Committee (ESC) respected the mandate given to the Commission.