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Brussels, |
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Markets integrity: Benchmarks and market abuse
The integrity of financial markets is crucial for maintaining investor trust and ensuring fair and transparent trading practices. To this end, the EU has established laws aimed at safeguarding market integrity, focusing particularly on financial benchmarks and market abuse.
Benchmarks are indices or indicators used to price financial instruments and contracts or to measure investment fund performance. The manipulation of benchmarks can lead to significant financial losses for consumers and investors. The LIBOR scandal highlighted the need for stringent regulations to govern benchmarks.
Market Abuse encompasses a range of unethical practices, including insider trading, market manipulation, and the unlawful disclosure of inside information. Such activities undermine market integrity and investor confidence.
Benchmarks are indices or indicators used to price financial instruments and contracts or to measure investment fund performance. The manipulation of benchmarks can lead to significant financial losses for consumers and investors. The LIBOR scandal highlighted the need for stringent regulations to govern benchmarks.
Market Abuse encompasses a range of unethical practices, including insider trading, market manipulation, and the unlawful disclosure of inside information. Such activities undermine market integrity and investor confidence.
EU Regulations
- Benchmarks Regulation (2016/1011/EU):
- Establishes a comprehensive framework for the provision, use, and supervision of benchmarks.
- Aims to ensure the accuracy and integrity of benchmarks, preventing manipulation and ensuring transparency.
- Market Abuse Regulation (MAR) (596/2014/EU):
- Defines and prohibits insider trading and market manipulation.
- Enhances transparency and fosters a level playing field in the financial markets.
- Introduces robust measures for monitoring and enforcement.
- New Market Abuse Directive (MAD) (2014/57/EU):
- Complements MAR by establishing criminal sanctions for serious cases of market abuse.
- Strengthens the enforcement mechanisms to deter and punish market abuse effectively.
Policy Making Timeline
- 1 February 2024: Political agreement on the listing act, part of the Capital Markets Union package, addressing clearing, insolvency, and listing.
- 17 October 2023: Proposal for a Regulation amending the Benchmarks Regulation as part of the 2024 Commission work programme.
- 14 July 2023: Adoption of a Delegated Regulation extending the transitional period for third-country benchmarks.
Background and Global Context
Financial markets have become increasingly global, leading to new trading platforms and technologies. However, this globalization has also opened up new possibilities for market manipulation.
The EU’s regulatory framework aligns with international standards set by the Basel Committee on Banking Supervision (BCBS) and the International Organization of Securities Commissions (IOSCO), ensuring consistent and effective market integrity measures globally.
The EU’s regulatory framework aligns with international standards set by the Basel Committee on Banking Supervision (BCBS) and the International Organization of Securities Commissions (IOSCO), ensuring consistent and effective market integrity measures globally.
