Firms urged to join powerful task force and to monitor market abuse offences

Law firms are being encouraged to join the Law Society and leading financial institutions in a high-powered group formed to monitor the development of the new market abuse regime.The Market Abuse Co-ordination Project (MACP) - a group sharing information and commenting on the regime - is the brainchild of the Financial Law Panel (FLP), which will act as co-ordinator for the group.The regime, created by the Financial Services and Markets Act 2000, introduces a new civil offence of market abuse in addition to existing law against insider dealing and market manipulation.

The three broadly defined elements of the offence are the misuse of information, giving false or misleading impressions, and distorting the market.Solicitor Colin Bamford, the FLP's chief executive, said: 'The new regime has created uncertainty and raised questions in different sectors of the financial services market - yet currently there is no shape to the discussions and no linking process.

We decided to ask around to see if there would be interest in forming an umbrella organisation to act as a kind of chat room.'Among the 19 groups signed up to the project are the City of London Law Society, the Law Society of Scotland, the Association of British Insurers, the British Bankers Association, the International Swaps and Derivatives Association, and the National Association of Pension Funds.Mr Bamford said that in addition to problem-sharing, the project would ensure that members' projects did not overlap or duplicate each other.

'Everyone is trying to simultaneously re-invent the wheel,' he said, 'It is important that they communicate with each other to battle different issues.'Currently, the British Bankers Association and London Investment Banking Association have formed a market behaviour working group, while City law firm Freshfields Bruckhaus Deringer has prepared a series of case studies on market abuse issues arising out of corporate finance business, which it is discussing with several investment banks.

When finalised, the firm intends to forward them to the Financial Services Authority (FSA).Mr Bamford welcomed the participation of solicitors and law firms in the project, saying it is 'not limited to organisations and trade associations'.

He said one of the great pluses was that the FSA has agreed to participate in the project.

'As regulators it was important to have their support and interpretation on certain matters,' he said.Annabel Sykes, a partner at Freshfields and member of the Law Society's company law committee, said: 'The market abuse regime has represented a new challenge and created an enormous amount of uncertainty.

The creation of the MACP has been a desirable development that should ensure that there is a sensible information flow.'Andrew Towler