Newsletter Boteva & Kantutis January 2017
The new Act on application of the measures against market abuse with financial instruments
The new Act on application of the measures against market abuse with financial instruments was promulgated in the State Gazette at the end of September 2016. Its last amendments were promulgated in the State Gazette Issue No. 105 as of 30th December 2016.
The Act entered into force on 1st of January 2017 and its aim was to implement the provisions of Regulation (EU) No 596/2014 of the European Parliament and of the Council of 16 April 2014 on market abuse, repealing Directive 2003/6/EC of the European Parliament and of the Council and Commission Directives 2003/124/EC, 2003/125/EC and 2004/72/EC (the Market Abuse Regulation). This Regulation establishes a common regulatory framework on inside dealing, the unlawful disclosure of inside information and market manipulation as well as introduces measures to prevent market abuse in order to ensure the integrity of financial markets in the Union and to enhance investor protection and confidence in those markets.
The new Law provides measures on application of the market abuse regulation and introduces the requirements of the Commission implementing Directive (ЕU) 2015/2392 of 17 December 2015 on Regulation (EU) No 596/2014 of the European Parliament and of the Council as regards reporting to competent authorities of actual or potential infringements of that Regulation.
The scope of the Law, as well as of the Market Abuse Regulation, reaches financial instruments admitted to trading on a regulated market or for which a request for admission to trading on a regulated market has been made. The Market Abuse Regulation makes a reference to the definition for “financial instruments” in Directive 2014/65/EU of the European Parliament and of the Council of 15 May 2014 on markets with financial instruments and amending Directive 2002/92/EC and Directive 2011/61/EU. According to this Directive the term financial instruments includes: (1) Transferable securities; (2) Money-market instruments; (3) Units in collective investment undertakings; (4) Options, futures, swaps, forward rate agreements and any other derivative contracts relating to securities, currencies, interest rates or yields, emission allowances or other derivatives instruments, financial indices or financial measures which may be settled physically or in cash; (5) Derivative instruments for the transfer of credit risk, and others.
The objective of the Law is to prevent and disclose market abuse, such as abuse with inside information, insider dealing, unlawful disclosure of inside information and market manipulation and to implement new defence mechanisms for the notifications for market abuse. These measures shall affect a large number of individuals and companies within the country.
Notifications referred to in the Law shall include, as appropriate, the names and the financial instruments concerned, the date and time of the request for admission to trading, and the date and time of the first trade.
Nevertheless, not all information can be disclosed. Unlawful disclosure of inside information arises where a person possesses inside information and discloses that information to any other person, except where the disclosure is made during the normal exercise of an employment relationship, or a profession.
The supervisory activities under the regulations of the law shall be performed by the Financial Supervision Commission of the Republic of Bulgaria.