An insight on market abuse and its effect on consumers

Abstract

Ensuring the efficient operation of financial markets is crucial, due to the potential ramification that may arise should the contrary take place. In the realm of financial markets, all elements are intricately interconnected. Thus regulation and supervision is essential at maintaining market integrity and protecting the investor, as this increases investor confidence leaving an impact on economic growth. Market abuse distorts the seamless operation of the financial markets, making it difficult for them to operate in an efficient and effective manner. The negative outcomes arising from market abuse can be various, including diminishing investor confidence that can possibly contribute to an economic crisis as is evident from the 2008 financial crisis. Following this historic event, the EU recognised the importance of ensuring supervision over the financial markets leading it to replace the previous framework on market abuse with the current one, Regulation 596/2014 of the European Parliament and of the Council. This dissertation aims at analysing the effectiveness of the features of this EU market abuse framework and whether it has any gaps. Reference is made to the sanctioning method propounded by the legislation. Furthermore, in one of its chapters, the dissertation embarks on a comparative analysis by referring to ESMA reports, with the purpose of examining why one particular country seems to be more successful in the implementation of penalties than others. The conclusion that is drawn from this, is that the culprit behind this, is not the legislation itself, but the national competent authorities and the way they implement the legislation. Finally, the dissertation aims at proposing recommendations on how the gaps in the Market Abuse Regulation can be minimised to have a more effective regulation in place.