In economics and finance, market abuse may arise in circumstances in which investors in a financial market have been unreasonably disadvantaged, directly or indirectly, by others who: [1]
Market abuse is split into two different aspects (under EU definitions): [1]
In 2013/2014, the EU updated its legislation on market abuse, [2] and harmonised criminal sanctions. In the 2015 Danish European Union opt-out referendum, the Danish population rejected adoption of the 2014 market abuse directive (2014/57/EU) and much other legislation.
In the UK, the market abuse directive (MAD) was implemented in 2003 to reduce market abuse. It applied to any financial instrument admitted to trading on a regulated market or in respect of which a request for admission to trading had been made. MAD was subsequently replaced by the Market Abuse Regulation (MAR) in 2016. [3]
Insider trading is the trading of a public company's stock or other securities based on material, nonpublic information about the company. In various countries, some kinds of trading based on insider information is illegal. The rationale for this prohibition of insider trading differs between countries/regions. Some view it as unfair to other investors in the market who do not have access to the information, as the investor with inside information could potentially make larger profits than an investor could make. However, insider trading is also prohibited to prevent the director of a company from abusing a company's confidential information for the director's personal gain.
Anti-competitive practices are business or government practices that prevent or reduce competition in a market. Antitrust laws ensure businesses do not engage in competitive practices that harm other, usually smaller, businesses or consumers. These laws are formed to promote healthy competition within a free market by limiting the abuse of monopoly power. Competition allows companies to compete in order for products and services to improve; promote innovation; and provide more choices for consumers. In order to obtain greater profits, some large enterprises take advantage of market power to hinder survival of new entrants. Anti-competitive behavior can undermine the efficiency and fairness of the market, leaving consumers with little choice to obtain a reasonable quality of service.
National Stock Exchange of India Limited (NSE) is one of the leading stock exchanges in India, based in Mumbai. NSE is under the ownership of various financial institutions such as banks and insurance companies. It is the world's largest derivatives exchange by number of contracts traded and the third largest in cash equities by number of trades for the calendar year 2022. It is the 7th largest stock exchange in the world by total market capitalization, exceeding $5 trillion on May 23, 2024. NSE's flagship index, the NIFTY 50, is a 50 stock index that is used extensively by investors in India and around the world as a barometer of the Indian capital market. The NIFTY 50 index was launched in 1996 by NSE.
The OTC (Over-The-Counter) Bulletin Board or OTCBB was a United States quotation medium operated by the Financial Industry Regulatory Authority (FINRA) for its subscribing members. FINRA closed the OTCBB on November 8, 2021.
Securities fraud, also known as stock fraud and investment fraud, is a deceptive practice in the stock or commodities markets that induces investors to make purchase or sale decisions on the basis of false information. The setups are generally made to result in monetary gain for the deceivers, and generally result in unfair monetary losses for the investors. They are generally violating securities laws.
Markets in Financial Instruments Directive 2014, is a directive of the European Union (EU). Together with Regulation No 600/2014 it provides a legal framework for securities markets, investment intermediaries, in addition to trading venues. The directive provides harmonised regulation for investment services of the member states of the European Economic Area — the EU member states plus Iceland, Norway and Liechtenstein. Its main objectives are to increase competition and investor protection, as well as level the playing field for market participants in investment services. It repeals Directive 2004/39/EC.
The Undertakings for Collective Investment in Transferable Securities Directive (UCITS) 2009/65/EC is a consolidated EU directive that allows collective investment schemes to operate freely throughout the EU on the basis of a single authorisation from one member state. EU member states are entitled to have additional regulatory requirements for the benefit of investors.
Sustainability reporting refers to the disclosure, whether voluntary, solicited, or required, of non-financial performance information to outsiders of the organization. Sustainability reporting deals with qualitative and quantitative information concerning environmental, social, economic and governance issues. These are the criteria often gathered under the acronym ESG.
Financial crime is crime committed against property, involving the unlawful conversion of the ownership of property to one's own personal use and benefit. Financial crimes may involve fraud ; theft; scams or confidence tricks; tax evasion; bribery; sedition; embezzlement; identity theft; money laundering; and forgery and counterfeiting, including the production of counterfeit money and consumer goods.
In economics and finance, market manipulation is a type of market abuse where there is a deliberate attempt to interfere with the free and fair operation of the market; the most blatant of cases involve creating false or misleading appearances with respect to the price of, or market for, a product, security or commodity.
The Capital Requirements Directives (CRD) for the financial services industry have introduced a supervisory framework in the European Union which reflects the Basel II and Basel III rules on capital measurement and capital standards.
Financial services in the Republic of Ireland refers to the services provided by the finance industry: banks, investment banks, insurance companies, credit card companies, consumer finance companies, government sponsored enterprises, and stock brokerages.
The Consumer Protection Act 1987 is an Act of the Parliament of the United Kingdom which made important changes to the consumer law of the United Kingdom. Part 1 implemented European Community (EC) Directive 85/374/EEC, the product liability directive, by introducing a regime of strict liability for damage arising from defective products. Part 2 created government powers to regulate the safety of consumer products through Statutory Instruments. Part 3 defined a criminal offence of giving a misleading price indication.
The Cyprus Securities and Exchange Commission, better known as CySEC, is the financial regulatory agency of Cyprus. As an EU member state, CySEC's financial regulations and operations comply with the European MiFID financial harmonization law.
Corruption in Italy is a major problem. In Transparency International's annual surveys, Italy has consistently been regarded as one of the most corrupt countries in the Eurozone. Political corruption remains a major problem particularly in Lombardy, Campania and Sicily where corruption perception is at a high level. Political parties are ranked the most corrupt institution in Italy, closely followed by public officials and Parliament, according to Transparency International. But in the 2013 Global Corruption Barometer report, Italy is in 17th position in front of the United Kingdom (18th), Switzerland (21st) and the United States (22nd).
Corruption in France describes the prevention and occurrence of corruption in France.
The Market Misconduct Tribunal is an independent body in Hong Kong which is established under the Securities and Futures Ordinance (SFO), and is chaired by a judge or former judge of the High Court who sits with two members.
Stock market equivalence is granted by the European Union to those countries whose stock markets are deemed to be 'equivalent' to those of the EU countries. On 3 January 2018, the EU implemented the "Markets in Financial Instruments Directive II" which required all European investment firms & traders to trade the shares of a company listed in the EU on a stock exchange within the EU or an equivalent third country exchange. In order to gain equivalence, the trading venues of the concerned country should have a high level of investor protection and sound mechanisms to deal with insider trading. The main purpose of this measure is to protect the interests of investors based in the EU. Analysts have called it a pioneer in financial regulation with the potential to restructure the global financial system. As of 17 November 2023, only three jurisdictions had been granted equivalence: the United States of America, Australia and Hong Kong. Switzerland too was granted equivalence, but only temporarily, and the EU announced in early May 2019 that it would not renew equivalence for Switzerland after 1 July 2019. This was part of the wider Swiss-EU trade dispute.
The Commodity Futures Trading Commission's Whistleblower Program was created with the 2010 passage of the Dodd–Frank Act. The program rewards individuals who report possible Commodity Exchange Act (CEA) violations. The program also extends anti-retaliation protections for whistleblowers who file claims.
The Market Abuse Directive (MAD) is a European Union (EU) legislation that aims to prevent and detect market abuse in the financial markets. It was enacted in 2003 and later revised in 2014, making it a key component of the EU's efforts to regulate and maintain fair and transparent financial markets. The MAD applies to all financial instruments listed on an EU regulated market, including stocks, bonds, derivatives, and commodities.