Approval of the Financial Services (Amendment No. 3) (Jersey) Law 200-.

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A decision made (27/07/2007) regarding: Approval of the Financial Services (Amendment No. 3) (Jersey) Law 200-.

Subject:	Approval of the Financial Services (Amendment No.3) (Jersey) Law 200-
Decision Reference:	MD-E-2007-0144		Exempt clause(s):
Type of Report: (oral or written)	Written		Person Giving Report (if oral):
Telephone or e-mail Meeting?			Report File ref:
Written report – Title	Financial Services (Amendment No.3) (Jersey) Law 200- (the “Amendment”)
Written report – Author (name and job title)	James Mews, Finance Industry Development Executive
Decision(s): The Minister approves the Amendment and directs the Finance Industry Development Executive to make such steps as are necessary to lodge the Amendment before the States for debate on 11 or 25 September 2007.
Reason(s) for decision: The changes proposed are to introduce standard regulatory provisions to bring the Financial Services (Jersey) Law 1998 into line with the requirements of the IMF, and consolidate offences relating to insider dealing and market manipulation into one Law. The major changes are to harmonise the investigatory powers of the Commission in market abuse cases, consolidate the offences under the Law, and revise of the Commission’s powers of co-operation with overseas regulators so that they more closely follow current international standards and Jersey’s international obligations. The proposed changes have been agreed following consultation.
Action required: The Finance Industry Development Executive to request the Publications Editor at the States Greffe to lodge the Amendment au greffe for debate on 11 or 25 September 2007.
Signature: Senator P.F.C.Ozouf (Minister)		Date of Decision: 27 July 2007

Approval of the Financial Services (Amendment No. 3) (Jersey) Law 200-.

MINISTER FOR ECONOMIC DEVELOPMENT

FINANCIAL SERVICES (AMENDMENT NO. 3) ( JERSEY ) LAW 200-

(“THE AMENDMENT”)

JERSEY FINANCIAL SERVICES COMMISSION (“THE COMMISSION”)

1 THE ISSUE

1.1 The Commission requests amendment of the Financial Services (Jersey) Law 1998 (the “1998 Law”) in order to modernise the market abuse regime and facilitate international co-operation in keeping with modern standards.

1.2 It is recommended that the Minister for Economic Development approves the Amendment, signs the certificate of compatibility with the European Convention on Human Rights, and that the Finance Industry Development Executive takes the necessary steps in order for this to be debated by the States as soon as possible, and ideally on 11 or 25 September 2007.

2 BACKGROUND

2.1 Drafting of the Amendment followed a period of public consultation in 2003, that considered developments in market abuse laws as adopted in the European Union (“EU”) in a new European Directive. However, the EU approach was considered not appropriate to apply to Jersey as it was mainly relevant to jurisdictions that regulate a securities market. As a result, a different approach was adopted, based on the regime in the UK. This became the subject of a Position Paper published by the Commission in December 2006 via the web site of Jersey Finance Limited (“JFL”). At the conclusion of this second consultation JFL advised that it had received no response from any of its members.

3 Proposals

3.1 The Amendment principally comprises improvements to the provisions in the 1998 Law relating to the prevention and investigation of market abuse. The changes may be summarised as follows –

3.1.1 Two key market abuse offences, namely market manipulation and insider dealing, are being consolidated under one Law. The first of these is contained in Article 30 of the 1998 Law, and the other is contained in the Company Securities (Insider Dealing) (Jersey) Law 1988 (the “1988 Law”). The changes will mirror the established regime under UK legislation and ensure that the provisions for both offences are in line with proven international models. The transfer of the Insider Dealing provisions will allow the 1988 Law to be repealed.

3.1.2 The harmonisation of the investigatory powers of the Commission in market abuse cases, so that they may be used where it is reasonable to do so. This will help to avoid inconsistencies arising from the different legal procedures for related offences set out in separate laws in the existing regime. It will also facilitate Jersey’s role in complying with its international obligations in order to investigate and assist overseas regulators where there are suspected cases of insider dealing and market manipulation with a Jersey connection (for example under the IOSCO [1] Multilateral Memorandum of Understanding), while retaining those protections currently available to the public.

3.1.3 A revision of the Commission’s powers of co-operation with overseas regulators so that they more closely follow current international standards. The current provision is considered to be unduly restrictive and its impediment to co-operation with other authorities has the potential to adversely affect Jersey’s reputation. The change will enable the Commission to provide assistance where the overseas offence is similar (but not necessarily exact) to the specified offence in Jersey.

3.2 The opportunity is also being taken to make two minor changes –

3.2.1 For the Commission to take into account the interests of existing, as well as future, customers when deciding whether or not to issue directions under Article 23; and

3.2.2 To correct a typographical error that currently causes ambiguity in Article 33(1)(i).

3.3 All of these changes affect areas of Jersey law that are likely to be subject to particular scrutiny during the forthcoming IMF assessment. If theses changes are not made, criticism is likely to be made by the assessment team.

3.4 No measurable cost or manpower implications arise for the Commission, the States or industry.

3.5 The Law Officer’s Department has advised that the Minister may provide the required statement under Article 16(1) of the Human Rights (Jersey) Law 2000.

4 ISSUE AND RECOMMENDATION

4.1 It is recommended that the Minister for Economic Development approves the Amendment, signs the certificate of compatibility with the European Convention on Human Rights, and that the Finance Industry Development Executive takes the necessary steps in order for this to be debated by the States as soon as possible, and ideally on 11 or 25 September 2007.

JAMES MEWS

Finance Industry Development Executive

25 July 2007

[1] International Organisation of Securities Commissions