Market abuse refers to unlawful behaviour in the financial markets, and it includes insider dealing, unlawful disclosure of inside information, and market manipulation. These actions obstruct full and proper market transparency, which is essential for ensuring fair and effective trading for all participants in integrated financial markets.
What is Insider Dealing?
Insider dealing occurs when a person in possession of inside information uses that information by acquiring or disposing for its own account or for the account of a third party, directly or indirectly, financial instruments to which that information relates. A cancellation or amendment of an order that was placed before the person possessed the inside information, is also regarded as insider dealing.
What is Unlawful Disclosure of Inside Information?
Unlawful disclosure of inside information arises when a person possesses inside information and shares it with another person, except where the disclosure is made in the normal course of their employment, profession or duties.
What is Market Manipulation?
Market manipulation refers to a range of unlawful practices aimed at distorting or influencing the natural supply and demand dynamics of financial markets. These practices can take various forms, including:
Misleading or Distorting Market Signals: Entering a transaction, placing an order or any behaviour that creates false or misleading signals regarding the supply, demand, or price of financial instruments, commodities, or emission allowances. This includes behaviour such as placing, modifying, or cancelling orders to manipulate market conditions, unless justified by legitimate reasons or accepted market practices.
Use of Deceptive Practices: Engaging in transactions, placing an order or any other behaviour which employs fictitious devices or other forms of deception to affect the price of financial instruments or related products.
Dissemination of Information: Spreading false or misleading information, including rumours, through media, including the internet, or other means, which could influence market prices or create artificial price levels.
Manipulation of Benchmarks: Providing false or misleading information on benchmarks or engaging in actions that manipulate their calculation, with knowledge or reasonable belief that the information is false.
The powers and duties of CySEC
CySEC is the competent authority responsible for overseeing and enforcing the provisions of the Market Abuse regulatory framework in Cyprus. It plays a crucial role in ensuring compliance by collecting information, conducting investigations and inspections, and imposing sanctions under the Market Abuse Law of 2016.
With significant powers at its disposal, CySEC can impose heavy penalties and administrative sanctions for non-compliance. Therefore, failure to comply with the Market Abuse Regulation can result in severe consequences. It is important to highlight that market abuse is considered a criminal offence under Law 136(I)/2016, which emphasises the seriousness of compliance.
Any action identified as Market Abuse constitutes a criminal and money laundering offence as it results in the generation of illicit assets from fraudulent activities, in one or another way. In this respect, providers such as CIF, CASP, and other entities regulated by CySEC, are required to maintain effective arrangements and robust trading monitoring systems to tackle such activities.
What is the Compliance with Market Abuse in 2024 course and what does it include?
The “
Compliance with Market Abuse Regulation in 2024” course is developed by
SALVUS Funds and delivered by their Risk & Compliance Director,
Evdokia Pitsilidou. This self-paced course is designed to augment the knowledge and expertise of professionals employed in CIF, CASP, and other CySEC regulated entities.
Professionals who undertake this course will obtain competencies to enhance company policies, procedures and controls towards the prevention, detection, and management of potential market abuse practices, by considering behaviours that consist unlawful disclosure of inside information, insider dealing and market manipulation, as well as the required characteristics of the trade surveillance systems employed.
The course is suited and recommended for the annual Continuous Professional Development (CPD) requirements of Compliance, AML and Brokerage officers, as well as professionals working at CIF and other CySEC regulated entities. It covers the following modules:
What is Market Abuse?: - Learners will gain an understanding of the three types of Market Abuse, the Market Abuse Regime, its scope of application, and the exceptions to the rules.
Market Abuse Regulatory Framework: - It covers the Lamfalussy process and its four levels, the EU legal framework, the Market Abuse Directive II, and relevant national legislation.
Inside information & Insider dealing: - This module explores topics such as inside information, insider dealing, front running, legitimate behavior, and market soundings.
Disclosure of Inside Information: - Learners will gain insights on issuer obligations, the delay of disclosure and relevant Q&As, the disclosure of inside information, insider lists, and managers' transactions.
Market Manipulation: - It covers market manipulation, including the methods and indicators used, the LIBOR scandal, accepted market practices, and the prevention and detection of market abuse. It also includes the STOR process.
CySEC Supervision: - Includes the powers of CySEC, administrative sanctions and penalties, criminal offences, the 2022 CySEC MAR fines, and the concept of whistleblowing.
Test Questions: - A final test ensures participants have a strong grasp of the material covered.
In conclusion, understanding and complying with the European Market Abuse regulatory framework is essential for maintaining market integrity and fostering investor confidence. This course offers professionals the opportunity to deepen their knowledge of key concepts such as insider dealing, market manipulation, and the responsibilities of issuers and regulators. With comprehensive modules covering the legal framework, disclosure requirements, and the role of CySEC, this course equips learners with the tools needed to navigate and adhere to market abuse regulations effectively.
The material of the “Compliance with Market Abuse Regulation in 2024” course is provided both in PDF slides and online video recordings, suitable for self-paced learning. Learners enrolled in the course have the flexibility to learn wherever and whenever.
Upon completion of the course, learners can evaluate their comprehension of the covered material by answering a series of questions reflecting the gained knowledge.
The completion of this course counts towards the Continuous Professional Development (CPD) annual requirements for professionals, and holders of the CySEC Advanced, Basic and AML certifications.
