This update was first published in the January 2012 International edition of Accounting and Business magazine.
The European Commission has proposed that the spot trading of carbon emissions permits be controlled by EU financial instrument laws, reducing this market’s exposure to fraud.
At present, these spot trades are not regulated by EU legislation – the Commission highlighted ‘a series of unfortunate fraudulent activities which the market has experienced in recent years’. The unfortunate activities include the digital theft of pollution permits from EU registries during January 2011.
The Commission is therefore proposing that these trades be controlled under the EU’s Markets in Financial Instruments Directive (MiFID) and Regulation (MiFIR). MiFID and MiFIR would impose on purchasers a duty of disclosure, notably on their industrial activity, plant capacity and utilisation.
The change comes as the Commission plans to overhaul the EU rules for securities markets by amending MiFID. Brussels wants the directive to properly regulate new trading platforms and high-frequency trading, repair regulatory weaknesses regarding investor protection, enforcement and supervision, working through the new European Financial Markets Authority (ESMA).
The Commission also wants tougher rules on market manipulation and insider dealing.
Keith Nuthall, journalist