European legislators agreed to tougher rules for offences such as market manipulation and insider dealing today.
The European Parliament overwhelmingly voted in favour of measures to toughen rules against market abuse with larger penalties and an increased scope that will include a wider range of trading venues and financial instruments than the current rules.
Under the new rules, companies convicted of market abuse could be fined triple the profits generated by the abuse, up to 15% of their annual turnover, or €15 million. Individuals could face fines of up to €5 million, along with industry bans.
The new rules will also be extended to cover a wider variety of financial instruments, including both exchange-traded and over-the-counter (OTC) commodity derivatives. In response to the LIBOR scandal, manipulating benchmark rate submissions will also be covered under the new rules.
“With the agreement, the rules will be extended to capture abuse on the electronic trading platforms that have proliferated in recent years. Abusive strategies through high frequency trading will be clearly prohibited,” said European Commissioner, Michel Barnier.
“Those who manipulate benchmarks such as LIBOR will be guilty of market abuse and face tough fines. Market abuse occurring across both commodity and related derivative markets will be prohibited, and cooperation between financial and commodity regulators will be reinforced,” he added.
“There is still much to do in restoring the trust and confidence in banks and the financial services industry. We must get the real economy moving again and make sure consumers are protected in the financial services sector. We are sending a clear signal that the EU is not a soft option or safe haven for perpetrators of market abuse,” said Arlene McCarthy the leading MEP on this legislation.