Germany Extends Market Manipulation Rules to European Emission Allowances

In 2009, the German Securities Trading Act (WpHG) was changed to extend the pre-existing market manipulation prohibition (which is based on the EU Directive on Market Abuse) to European emission allowances (EUAs) that are traded on an exchange in Germany or on a comparable market in another EU/EEA member state. Engaging in market manipulation with respect to EUAs has thus become a criminal offence. The German legislator saw a need to extend the market manipulation rules to EUAs to protect the market integrity and operability of the financial markets particularly in light of the expected increase in the trading of the EUAs and the auction of EUAs from 2010 onwards.

The amendment is restricted in its scope. EUAs continue to be excluded from the definition of financial instruments which would have had more far reaching consequences (insider trading rules, licensing issues, business conduct rules).