The Securities Authority plans to expand its definition of insider trading.
In the wake of harsher penalties imposed by the courts on white collar crime in the past year, the Israel Securities Authority plans to crack down on insider trading and expand its definition beyond the two criteria in law: material information provided by a person within a company that might affect the share price. The Securities Authority also intends to expand the ban on insider trading to financial mediators, such as investment advisers.
"In order to increase public confidence in the capital market and ensure fair trading, the Securities Authority intends to move forward on a bill to prevent front running by other financial managers and their employees," says the Securities Authority in its road map. "Front running means a transaction in a security on the basis of prior information about an expected act by another party in the security. Front running, like the use of insider information, harms the proper functioning of the capital market. To carry out front running, there is information to which the second party in the transaction is not exposed. This information creates an unfair advantage."
The Securities Authority intends to establish supervisory authority requiring financial mediator companies, which employ other financial mediators, to appoint a compliance officer and draw up procedures to prevent front running.
Published by Globes [online], Israel business news - www.globes-online.com - on February 6, 2014
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