economics Economics () is a behavioral science that studies the Production (economics), production, distribution (economics), distribution, and Consumption (economics), consumption of goods and services. Economics focuses on the behaviour and interac ...

and

finance Finance refers to monetary resources and to the study and Academic discipline, discipline of money, currency, assets and Liability (financial accounting), liabilities. As a subject of study, is a field of Business administration, Business Admin ...

, market abuse may arise in circumstances in which

investor An investor is a person who allocates financial capital with the expectation of a future Return on capital, return (profit) or to gain an advantage (interest). Through this allocated capital the investor usually purchases some species of pr ...

s in a

financial market A financial market is a market in which people trade financial securities and derivatives at low transaction costs. Some of the securities include stocks and bonds, raw materials and precious metals, which are known in the financial marke ...

have been unreasonably disadvantaged, directly or indirectly, by others who:EU Legislation Summaries: Market abuse
/ref> * have used information which is not publicly available (

insider dealing Insider trading is the trading of a public company's stock or other securities (such as bonds or stock options) based on material, nonpublic information about the company. In various countries, some kinds of trading based on insider informatio ...

) * have distorted the price-setting mechanism of

financial instrument Financial instruments are monetary contracts between parties. They can be created, traded, modified and settled. They can be cash (currency), evidence of an ownership, interest in an entity or a contractual right to receive or deliver in the form ...

s * have disseminated false or misleading information (

market manipulation In economics and finance, market manipulation occurs when someone intentionally alters the supply or demand of a security to influence its price. This can involve spreading misleading information, executing misleading trades, or manipulating ...

) Market abuse is split into two different aspects (under EU definitions): #

Insider dealing Insider trading is the trading of a public company's stock or other securities (such as bonds or stock options) based on material, nonpublic information about the company. In various countries, some kinds of trading based on insider informatio ...

: where a person who has information not available to other investors (for example, a director with knowledge of a takeover bid) makes use of that information for personal gain #

Market manipulation In economics and finance, market manipulation occurs when someone intentionally alters the supply or demand of a security to influence its price. This can involve spreading misleading information, executing misleading trades, or manipulating ...

: where a person knowingly gives out false or misleading information (for instance, about a company's financial circumstances) in order to influence the price of a share for personal gain In 2013/2014, the EU updated its legislation on market abuse, and harmonised criminal sanctions. In the 2015 Danish European Union opt-out referendum, the Danish population rejected adoption of the 2014 market abuse directive
2014/57/EU
and much other legislation. In the UK, the market abuse directive (MAD) was implemented in 2003 to reduce market abuse. It applied to any financial instrument admitted to trading on a regulated market or in respect of which a request for admission to trading had been made. MAD was subsequently replaced by the Market Abuse Regulation (MAR) in 2016.

See also

References

Further reading