The Government have decided at this time not to opt in to the European Commission’s proposal for a criminal sanctions directive on insider dealing and market manipulation, although hopes to be in a position to do so in the future.
The aim of the Commission’s proposal is to establish criminal sanctions for offences of market abuse. The proposal seeks to complement the broader EU framework for tackling market abuse, which will be provided for in the larger draft market abuse regulation. The proposed criminal sanctions directive establishes that where market abuse has been committed intentionally, member states must make provision for criminal sanctions to be able to be applied.
The UK already covers all of the offences in its criminal law and also goes further by capturing, for example, acts of market abuse that are committed recklessly, as well as those committed intentionally. The Commission’s draft proposal is sufficiently flexible for member states to go further than the minimum standards specified, which is helpful to UK interests and the comprehensiveness of our existing domestic regime.
The Government’s decision not to opt in at this point in time is a reflection of the sequencing of the Commission’s proposal, rather than particular concerns as to the substance. The proposed directive is entirely dependent on the outcome of the market abuse regulation (which is currently in very early stages of negotiation), and the markets in financial instruments directive (also in early stages of negotiation) which will determine the new regulatory landscape for financial services. The Government believe that it is difficult to assess the implications, scope and way this proposal may develop considering the broader uncertainty of the market abuse framework being itself simultaneously subject to a major review.
Although the Government have decided that the UK should not opt in to the proposal now, they intend to participate fully in the negotiations in the hope that they will be able to opt in later, once these proposals are better progressed, not least as the UK already covers all these offences today in its criminal law.