EU directive puts standard insider dealing rules into effect

New EU-wide rules aimed at combating insider dealing and conflicts of interest in investment matters were signed into law yesterday.

The Minister of State for Trade and Commerce, Michael Ahern, said the new regulations would contribute to the harmonisation of European rules against market abuse, "reinforcing market integrity and increasing investor confidence in the financial market".

The Market Abuse directive covers all financial instruments such as shares which are traded on a regulated market. Its rules are designed to stamp out situations where some investors have been unreasonably disadvantaged by others.

This could cover cases where, for example, someone seeks to distort the price of shares, or disseminates information or recommendations in a manner that could give false or misleading information.

Most of the new rules came into effect yesterday but some, including those relating to stock recommendations, will not take force until October.

The delay is aimed at facilitating firms in introducing new systems and procedures and in educating staff.

This aspect of the directive will affect the media, requiring journalists to disclose any interests in a given share when publishing recommendations on it. As a rule, this will mean any investment in the share in question of more than €7,500.

The legislation allows, however, for the exemption of the media from a bulk of the directive provided the Irish Financial Services Regulator deems the media outlet or the journalist to be subject to an adequate regime of self regulation.

The Irish transposition of the Market Abuse directive came on the same day as the EU internal market commissioner, Charlie McCreevy, criticised a number of EU states for delays in adopting the rules.

"This is going to hamper the efficiency of Europe's capital markets," the commissioner said.

The directive should have been transposed before last October.