An overview analysis of selected challenges in the enforcement of the prohibition of insider trading and market manipulation in the European Union and South African regulatory frameworks

H Chitimira

doi:10.4314/ldd.v19i1.5

Abstract

It is submitted that cross-border trading in securities has caused a great number of challenges for various national regulators, especially with regard to the enforcement of market abuse laws. For instance, cross-border trading in securities has exacerbated the commission of other related illicit trading practices, such as, high frequency trading, credit default swaps, short selling and front running, particularly during the 2008-2009 global financial crises. Moreover, cross-border trading in securities has, to some extent, given rise to the inconsistent application and enforcement of the market abuse prohibition in South Africa and other European Union (EU) Member States. Accordingly, the need for strong co-operation and co-ordination between such regulators is still crucial and inevitable for the purposes of combatting market abuse in the EU and other jurisdictions, such as, South Africa. It is against this background that some selected national regulators and/or role players in the enforcement of the market abuse prohibition in South Africa, such as, the Financial Services Board (FSB), the Directorate of Market Abuse (DMA) and the Enforcement Committee as well as the EU’s Committee, of the Wise Men, the Forum of European Securities Commissions (FESCO), the Committee of European Securities Commissions Regulators (CESR), the European Securities and Markets Authority (ESMA), the Lamfalussy Process and the EU’s Action Plan for Financial Services, will be discussed. This is mainly done to isolate and expose the challenges and/or flaws in the enforcement of market abuse laws in both the EU and South Africa8 in order to recommend, where applicable, possible anti-market abuse measures that could be employed to enhance the curbing of market abuse activities in their respective jurisdictions. Thereafter, some concluding remarks will be provided

Highlights

It is submitted that cross-border trading in securities has caused a great number of challenges for various national regulators, especially with regard to the MARKET MANIPULATION IN THE European Union (EU) AND IN SOUTH AFRICA enforcement of market abuse laws.[1]
The role of the Forum of European Securities Commissions (FESCO) will not be discussed in much detail here, as there will be a greater focus on the role of its successor, the CESR, which will be analysed below
Unlike the Committee of the Wise Men’s committees, namely the CESR, and the European Securities and Markets Authority (ESMA),[64] the Financial Services Board (FSB) has no authority to oversee the enforcement of securities and market abuse laws by similar regulatory bodies across the African Union Member States.[65]

Summary

INTRODUCTION

It is submitted that cross-border trading in securities has caused a great number of challenges for various national regulators, especially with regard to the. Against this background that some selected national regulators and/or role players in the enforcement of the market abuse prohibition in South Africa, such as, the Financial Services Board (FSB), the Directorate of Market Abuse (DMA) and the Enforcement Committee as well as the EU’s Committee, of the Wise Men, the Forum of European Securities Commissions (FESCO), the Committee of European Securities Commissions Regulators (CESR), the European Securities and Markets Authority (ESMA), the Lamfalussy Process and the EU’s Action Plan for Financial Services, will be discussed. Thereafter, a brief comparative analysis of the role players in the EU and South Africa will be undertaken

The role of the FESCO

The role of the CESR

The role of the EU’s Action Plan for Financial Services

The role of the Lamfalussy Process and the Committee of the Wise Men

CONCLUDING REMARKS