NO ENTRY into the Houses of Parliament in a suit of armour, and the MAD directives

Bruce BlandWhile you may think that the title of this blog entry is obviously silly, it serves as a good example of the difference between sensible rules and bad rules. Think about it – can you work out the bad one?

“NO ENTRY into the Houses of Parliament in a suit of armour” may sound ridiculous but, if you think about it, it made perfect sense when it was created at a time when knights did walk around in armour and the rule would have been easy to implement and any infringements easily prosecuted.

The MAD (Market Abuse Directive) rules currently being debated in the European Parliament are, however, worded in such a way that both finding infringements and subsequent prosecution would be almost impossible!

I can think of several examples of bad MAD rules which are nearly impossible to enforce as they are not defined in a clear and measurable way. For example, the rule prohibiting “placing a large order into the order book which may then affect the price formation in the order book”. This would be altogether much more clearly expressed as “No order larger than 10% of normal traded volume may be placed”.

Never mind the rules themselves, according to the European Commission member states’ sanctioning regimes are “weak and heterogeneous” and “insufficiently dissuasive”, resulting in an “ineffective enforcement of the directive”. If the MAD rules were written in a more concise manner then perhaps judges and courts would be able to check for the abuse and prosecute more effectively when abuse is detected.

Now where’s my suit of armour, I fancy a stroll!

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