what is market abuse

Market abuse refers to situations where investors in a financial market have been unreasonably disadvantaged, directly or indirectly, by others who have used information which is not publicly available (insider dealing), distorted the price-setting mechanism of financial instruments, or disseminated false or misleading information (market manipulation) . Market abuse is split into two different aspects under EU definitions: insider dealing and market manipulation. Insider dealing occurs when a person who has information not available to other investors makes use of that information for personal gain. Market manipulation occurs when a person knowingly gives out false or misleading information in order to influence the price of a share for personal gain. The Market Abuse Regulation (MAR) was implemented in the UK in 2016 to replace the market abuse directive (MAD) and reduce market abuse. The regulation prohibits insider dealing, unlawful disclosure of inside information, and market manipulation. Failure to comply with relevant provisions could lead to the application of a range of administrative and criminal sanctions that apply to market abuse, as well as civil liability under general law.