Market Abuse and Insider Dealing

Описание: Insider dealing is one of the principal forms of market abuse. MAR defines insider dealing as follows:

Insider dealing arises where a person possesses inside information and uses that information by acquiring or disposing of, for its own account or for the account of a third party, directly or indirectly, financial instruments to which that information relates. The use of inside information by cancelling or amending an order concerning a financial instrument to which the information relates where the order was placed before the person concerned possessed the inside information, shall also be insider dealing.

In short, insider dealing occurs where an investor has a certain type of information, namely ‘inside information’, and uses that information to make investment decisions.

In MAR, inside information is defined in terms of four key characteristics:
• Information of a precise nature.
• Information which has not been made public.
• Information relating, directly or indirectly, to one or more issuers or to one or more financial instruments.
• Information which, if it were made public, would be likely to have a significant effect on the prices of those financial instruments or on the price of related derivative financial instruments.

Hence, in simple terms, inside information is information which is not available to other investors, but which would have a significant effect on the price of a financial instrument if it were available.

According to MAR, an individual may hold such information relating to a particular issuer, i.e. a company issuing financial instruments, as a result of:
• being a member of the management, or similar body, of the company
• being a shareholder
• the individual’s employment or profession
• criminal activities.

However, this list is not exhaustive, since the rules also apply to ‘any person who possesses inside information under circumstances other than those referred to earlier, where that person knows or ought to know that it is inside information.’

In addition to insider dealing, MAR prohibits two related forms of behaviour, namely recommending insider dealing and unlawfully disclosing inside information:

• Recommending: Recommending insider dealing relates to a situation where an individual has inside information and recommends that another person buys or sells a related financial instrument, or cancels or amends an existing order for a related instrument.
• Unlawful disclosure of inside information: MAR defines the unlawful disclosure of inside information second offence as when ‘a person possesses inside information and discloses that information to any other person, except where the disclosure is made in the normal exercise of an employment, a profession or duties.’

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