THE MARKET ABUSE REGIME – RESHAPING INSIDER DEALING PROHIBITIONS
Insider trading has proved a particularly difficult nettle to grasp, not only in this jurisdiction, but elsewhere. How does one determine when the line has been crossed between opportunism and illegitimate behaviour? How does one define the type of information which may be used in or in relation to the financial markets? To what extent should the State, alternatively market users, be involved in setting these parameters? How does one ensure sufficient certainty in the law to preserve the liquidity of the markets, at the same time as maintaining enough flexibility in the law to react to new sharp practices? What sanctions are appropriate to this type of behaviour? What level of censure does insider trading deserve? How does one actually change market behaviour? These are some of the issues that have underpinned and continue to shape prohibitions against insider trading. They make formulating an appropriate response and articulating the policy supporting such response a complex task.1 In this country, insider trading has primarily been addressed by the criminal law, most recently in the shape of Part V of the Criminal Justice Act 1993 (CJA). The Government has now taken the opportunity in the Financial Services and Markets Act 2000 (the Act) to create a new statutory offence of market abuse. The market abuse offence addresses two types of behaviour: misuse of information and market manipulation. The misuse of information offence will introduce a new and modern approach to insider trading,2 which will supplement rather than supersede the criminal offence of insider dealing contained in Part V of the Criminal Justice Act 1993. The creation of the market abuse offence has been one of the most significant and controversial aspects of the new Act. This essay will put the misuse of information offence in context before considering how the new offence reshapes existing insider trading prohibitions.