Update of the "Market Abuse Law"

Following its adoption by the Luxembourg Parliament, the law of 23 December 2016 on market abuse was finally published in the official Luxembourg gazette Mémorial A under number 279 on 27 December 2016 (the “Market Abuse Law”). The Market Abuse Law formally came into effect on 2 January 2017, three days after its publication in Mémorial A. It is worth mentioning that the provisions relating to OTFs, emissions allowances, and auctioned products based thereon will not take effect before 3 January 2018.

The Market Abuse Law incorporates Directive 2014/57/EU of 16 April 2014 on criminal sanctions for market abuse (the “Market Abuse Directive II”) into Luxembourg law and provides for the formal repeal of the Luxembourg law of 9 May 2006 on market abuse, under which the former legal regime was established. The objective of the Market Abuse Law is to ensure the proper application of EU Regulation No 596/2014 of 16 April 2014 on market abuse (the “Market Abuse Regulation”) by harmonizing and strengthening the rules across the European Union regarding the prevention, detection, and sanctioning of market abuse.

In this context, the Market Abuse Law completes the provisions of the Market Abuse Regulation by clarifying the new supervisory and sanctioning role of the Commission de Surveillance du Secteur Financier (CSSF), which is the competent national authority responsible for supervising the correct application of the Market Abuse Regulation and compliance with its provisions. In this respect, the Market Abuse Law provides for extensive information rights and sanction powers for the CSSF and governs the cooperation of the CSSF with the Luxembourg public prosecutor’s office and the supervisory authorities of EU member states and other countries. Moreover, the Market Abuse Law introduces reinforced criminal sanctions for insider dealing, incitement to insider dealing, divulgation of privileged information, and market manipulation.

With respect to the Market Abuse Regulation, it is worth mentioning that on 27 January 2017, the European Securities and Markets Authority (ESMA) published its so-called “Questions and Answers” paper with the aim of clarifying the scope and interpretation of the Market Abuse Regulation. Furthermore, ESMA has issued three additional guidelines since October 2016, namely:

(i) guidelines on the delay of disclosure of inside information, dated 20 October 2016;

(ii) guidelines on persons receiving market soundings, dated 10 November 2016; and

(iii) guidelines on information involving commodity derivatives markets or related spot markets for the purpose of defining inside information on commodity derivatives, dated 17 January 20171

On a national Luxembourgish level, the CSSF has limited itself, for the time being, to issuing the circulars CSSF 16/646 and CSSF 17/648 and integrating the ESMA guidelines dated 20 October 2016 and 10 November 2016 into the Luxembourg set of rules regarding the prevention, detection, and sanctioning of market abuse.