Preventing market abuse

Abstract

This brief article is an introduction to the newly passed Act on insider dealing and market abuse, which was approved by Parliament earlier this month. It was published in the Government Gazette last Wednesday, and will come into force on Friday as Act IV of 2005. The Act will transpose into Maltese law a recent European Directive, 2003/6/EC, more commonly known as the Market Abuse Directive. As an EU member state, Malta was obliged to transpose this Directive, which forms an integral part of the EU acquis. The brief paper is an exceedingly simplified overview {without footnotes or references) of some significant features of the new Act and should not be considered as anything more. It is limited to broad background issues and selected issues that should hopefully allow the reader to place the imminent transposition of this recent EU Directive within a recognisable context. This is by no means the first Maltese law to tackle insider dealing or market abuse. The original insider dealing provisions in Maltese Jaw were introduced in the Malta Stock Exchange Act of 1990. Later, in 1994, a new Insider Dealing Act was adopted. This was amended in 2002 and brought Maltese law fully in line pre-accession with the then applicable EU Directive on Insider Dealing of 1989. This Directive has now been replaced by the so-called Market Abuse Directive of 2003. This development has forced more changes to Maltese law and to the way activity on our single stock exchange is to be carried out in future. These measures are intended to create a framework which provides more comfort and security to the investing public, to strengthen confidence in the financial markets and to punish wrongdoing.