Bill to buttress the capital market

Harmonizing law with EU directive, it requires stockbrokerages to report suspicious transactions

At yesterday’s presentation, from left to right, ASE head Spyros Capralos, Economy Minister Giorgos Alogoskoufis, Capital Market Commission chairman Alexis Pilavios, and the Economy Ministry’s General Secretary Giorgos Mergos.

The government and stock market authorities yesterday presented a draft bill on protecting the capital market from share manipulation and abuse of privileged information, thereby harmonizing Greek legislation with European Union Directive EC 2003/6.

Economy and Finance Minister Giorgos Alogoskoufis told a press conference in the presence of the president of the Athens Stock Exchange, Spyros Capralos, and Chairman of the Capital Market Commission (CMC) Alexis Pilavios that the bill is aimed at creating a modern, efficient and functioning institutional framework for the capital market.

“It introduces a comprehensive series of preventive measures aimed at promoting the correct and adequate dissemination of information to the investing public,” he said. “This will contribute to increasing transparency in the market and preventing instances of abuse.”

The innovative feature of the bill is that it requires stockbrokerages to inform the CMC when they suspect that a client’s transactions constitute abuse of privileged information or share manipulation. The detailed regulations for recording, taping and archiving orders received by intermediaries in trading are purely precautionary.

Alogoskoufis said the scope for battling share manipulation is broadened both in terms of information and the people who may handle it, as the bill refers to “privileged” rather than merely “confidential” information. A criminal offense will be determined by simultaneous occurrence of fraud and malice when transactions exceed 1 million euros and the gain of the offender exceeds 300,000 euros.

The bill also defines the term “market manipulation,” which includes the circulation of false or misleading information and placing orders via misleading methods.

When the bill becomes law, offenders will be punished even in the case of unintended manipulation through transactions or relevant orders, although they will be allowed to prove in their defense that transactions were made for legitimate reasons, abiding by acceptable market practices.

Unlike the existing law, the new bill further provides for the quickest possible publication of all privileged information by listed companies.

The bill will be followed by another, setting the prerequisites for introducing securities for trading in organized markets, the strengthening of the independence of the Capital Market Commission, the amendment of the framework concerning portfolio investment companies, investment intermediary companies, and the liquidation of stockbrokerages.