UK's Membership of EU and Its Impact Essay

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UK's Membership of EU and its Impact on Insider Trading

The European Union has recently introduced criminal sanctions in all its member countries in cases of market manipulation and insider trading. The new regulations are quite strict and are essential in reforming the financial markets. There are two directives Market Abuse and Criminal Sanctions [footnoteRef:1]and MFID [footnoteRef:2] have been introduced recently by EU in their pursuit to eliminate market manipulation and insider trading. [1: Criminal sanctions include fines up to £5million with a limit of the minimum amount of all the profits that are made through insider trading. ] [2: MFID stands for Markets in Financial Instruments Directive, this directive was introduced to protect insider trading dealings]

The criminal sanctions already exist in UK laws, however these sanctions are meant to have a greater impact on those member countries where leniency have been obtained in cases o insider trading and the punishment levels for market manipulation are low. The new sanctions can pose a systematic risk also because it can have a disruptive impact on the economy. The UK market is not much affected by the new directives because they already had similar approach in dealing with market manipulation and financial frauds.

EU directives have clearly stated that prison sentences would be given to those who are involved in insider trading. UK laws even before these directives had imposed strict penalties in cases of insider trading and have been judging many alleged people with prison sentences however that would have an impact on some countries like Estonia, Finland, Austria and Czech Republic, as that would be the first time when these countries would be taking such strict measures against insider trading and market manipulation.

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EU Parliament has introduced the Market Abuse rules[footnoteRef:3]; they have created quite a panic in certain countries as financial frauds were not punished as severely in previous times. EU has ensured that financial frauds are served with severe punishments among all its 27 member countries. The main focus of Market abuse rules are market manipulation and insider trading. It is expected that these rules will take their complete effect by the end of this year. The main purpose of these regulations is to get rid of the insider trading and market manipulation activities in the member countries of European Union. [3: Market Abuse Rules includes strict punishment against white collar crimes to take strict measures against insider trading and market manipulation.]

The UK Labor Party has supported these laws and considers that "free for all"[footnoteRef:4] behavior of other member countries will be restricted through these directives. Many countries have been unable to tackle the unlawful practices but they will now have to comply with the new regulations that are imposed on them by European Union. This will help the UK market o get a fair chance as….....

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