economics Economics () is the social science that studies the production, distribution, and consumption of goods and services. Economics focuses on the behaviour and interactions of economic agents and how economies work. Microeconomics analyzes ...

and finance, market abuse may arise in circumstances where

investor An investor is a person who allocates financial capital with the expectation of a future return (profit) or to gain an advantage (interest). Through this allocated capital most of the time the investor purchases some species of property. Type ...

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 market ...

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) * have distorted the price-setting mechanism of financial instruments * have disseminated false or misleading information (

market manipulation In economics and finance, market manipulation is a type of market abuse where there is a deliberate attempt to interfere with the free and fair operation of the market; the most blatant of cases involve creating false or misleading appearances ...

) Market abuse is split into two different aspects (under EU definitions): # Insider dealing: 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 is a type of market abuse where there is a deliberate attempt to interfere with the free and fair operation of the market; the most blatant of cases involve creating false or misleading appearances ...

: 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 A referendum on one of the country's opt-outs from the European Union was held in Denmark on 3 December 2015. Specifically, the referendum was on whether to convert Denmark's current full opt-out on home and justice matters into an opt-out with ...

, 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