Protection of Investors and Legal Mechanisms for Prevention of Market Abuse in European Union and Bosnia and Herzegovina

Abstract

Level of protection offered to investors at a certain market is the indicator of overall development of that financial market and a necessary prerequisite for its successful functioning. One of the key instruments in ensuring an adequate investor protection is the prevention and sanctioning of the market abuse. In this article the author examines characteristics and efficiency of the legal mechanisms for prevention of the market abuse established in the European Union and Bosnia and Herzegovina with the aim of assessing the degree of their compliance by comparing the provisions of the Market Abuse Directive 2003/6/EC with the provisions of laws governing the securities markets in Bosnia and Herzegovina. Analysis of mechanisms for prevention and sanctioning of the market abuse established at the entity level has identified their inconsistency that causes an uneven approach to the realization of their primary objectives. This is also reflected on the ensuring of optimal level of protection of investor's interest in accordance with the possibilities and level of securities market development. Comparison of solutions present in the Bosnian law with European law solutions has revealed significant differences that need to be eliminated if the goal of full harmonization of domestic legislation with the acquis communautaire wants to be achieved.