Market Abuse Directive

Author:Ms Tara O'Callaghan
Profession:Dillon Eustace


The EU Market Abuse Directive, implemented in Ireland on 1 July, 2005 as the Market Abuse (Directive 2003/6/EC) Regulations (the "Regulations"), imposes significant obligations on all listed issuers (both Irish and overseas) whose securities or instruments are listed on the Irish Stock Exchange ("ISE"). The Regulations strengthen and extend the existing Irish Stock Exchange rules relating to inside information. They also create a new offence of market manipulation1.

The Regulations applies to issuers of all listed securities (including open and closed ended funds, debt securities and securitizations) or where a request for admission to trading has been made.

The new obligations imposed by the Regulations are set out below:-

Disclosure of Inside Information

"Inside information" is information of a precise nature relating directly or indirectly to one or more issuer of financial instruments or to one of more financial instruments which has not been made public and which, if it were made public, would be likely to have a significant effect on the price of those financial instruments or on the price of related derivative financial instruments. "Information of a precise nature" is defined as information that indicates a set of circumstances which exists or may reasonably be expected to come into existence, or an event which has occurred or may reasonably be expected to occur, and is specific enough to enable a conclusion to be drawn as to the possible effect of that set of circumstances or an event, as the case may be, on the process of financial instruments or related derivative financial instruments.

The Regulations provide that it is an offence to use inside information to buy or sell financial instruments. It is also an offence to disclose inside information to any other person, unless this is done in the normal course of a persons employment, profession or duties. There are, however a number of defences. For example, engaging in buy-back programmes, own share purchases, or post-merger stabilisation measures would not be deemed to be market abuse provided certain relevant conditions are met. In addition, possessing inside information relating to a target company in a public takeover would not be considered market abuse if this is in conformity with the Irish Takeover Rules.

Issuers of financial instruments that are admitted to trading on a regulated market must inform the public as soon as possible of inside information which...

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