Cicero Policy Briefer

Issue 4, September 2006

Treasury Select Committee may look at market abuse

Two Conservatives on the Treasury Select Committee have indicated that they may ask for an inquiry to look at insider trading. Senior Conservative Michael Fallon MP, and David Gauke MP, a former financial services lawyer, have indicated that they may begin looking at market abuse as early as the new year.

Many in recent months have raised concerns about market abuse in the UK and Europe. While countries have effectively implemented the Market Abuse Directive, enforcement remains a vexing and difficult proposition. Three recent studies by different organisations, including a study by the FSA released in May, have shown that price movements correspond in the statistically significant way before deal announcements.

The FSA took major punitive action earlier this year against hedge fund trader Philippe Jabre for trading convertible bonds after he was already ‘over-the-wall’.

Cicero expects more attention to be directed in this area as the year progresses by several actors in addition to the Select Committee. The European Commission is unlikely to take any action, however it is very likely that IOSCO and CESR will give further consideration to the matter and ask regulators what they are doing prevent market abuse and insider trading.

By the Cicero News Team