EUROPEAN MPs yesterday approved plans for huge fines for traders who manipulate energy and financial markets, the latest stage in the crackdown after Libor and energy market rigging scandals.
Those found guilty of market abuse could be fined up to €5m (£4.2m) and be banned from working in the sector in future.
And the companies they work for will face fines of up to 15 per cent of their annual turnover, or €15m.
The European Parliament expanded their definition of “market abuse” to cover transmitting false information, and providing misleading inputs to the calculation of benchmark rates like Libor.
Commodity derivatives affecting food and energy prices will also be included in the definition.
But although the moves are billed as improving market conduct, lawyers warned they will also pile more costs on the consumers that use financial services as well as non-financial firms who look to banks to protect them from market risks.
“Many of the requirements relating to emissions allowances are completely new and the novel disclosure obligations on large emitters could have consequences for the insider dealing regimes relating to other markets, in particular commodities,” said Mark Compton from international law firm Mayer Brown.
“While clearly aimed at making markets cleaner, these new requirements could have the collateral consequence of affecting liquidity and increasing production and hedging costs for non-financial commercial enterprises and such costs could eventually be passed on to consumers.”
The new regulations will now go to EU member states to consider how they will fit in with national law.
The UK is already ahead of the EU on areas covered like insider dealing and manipulation, but will still be affected by the new guidance on commodities and energy markets.