The material on this site is for financial institutions, professional investors and their professional advisers. It is for information only. Please read our Terms & Conditions, Privacy Policy and Cookies before using this site. Please see our Subscription Terms and Conditions.


All material subject to strictly enforced copyright laws. © 2021 Euromoney, a part of the Euromoney Institutional Investor PLC.
Opinion

EU directive Absolutely MAD

EU directive misses the mark

The unfortunately named Market Abuse Directive is living up to its acronym. This EU regulation seeks to set in place a common framework for preventing insider dealing, market manipulation and full disclosure of information to market participants. It implements all sorts of sensible things such as listing persons with access to inside information. Another rule requires researchers to declare possible conflicts of interest.

But the section of the regulations that governs market manipulation might well prove to be counter-productive.

One of the directive's rules is to limit, to 5% of the total deal size, how much underwriters can go short of a new issue in order to stabilize prices. The objective of this rule is to stop arrangers bringing new issues at too aggressive a price, but few interests are served by it. Innovative or risky deals will be far harder to manage because hedge funds and other opportunists will be better able to second-guess what underwriters' positions are.

You have reached premium content. Please log in to continue reading.

Read beyond the headlines with Euromoney

For over 50 years, our readers have looked to Euromoney to stay informed about the issues that matter in the international banking and financial markets. Find out more about our different levels of access below.

SUBSCRIBE ONLINE TODAY

Unlimited access to Euromoney.com and Asiamoney.com

Expert comment, long reads and in-depth analysis interviews with senior finance professionals

Access the results of our market-leading annual surveys across core financial services

Access the results of our annual awards, including the world-renowned Awards for Excellence

Your print copy of Euromoney magazine delivered monthly

£73.75 per month

Billed Annually

FREE 7 DAY TRIAL

Unlimited access to Euromoney.com and Asiamoney.com, including our top stories, long reads, expert analysis, and the results of our annual surveys and awards

Sign up to any of our newsletters, curated by our editors

LOGIN NOW

Already a user?

We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree