Insider dealing
Also called insider trading
Insider dealing is buying or selling financial instruments while holding inside information about them, meaning precise information that is not public and would likely move the price. It also covers cancelling orders and encouraging others to trade on that information. It is a civil offence under market abuse rules and a crime in the UK, EU and US.
How it works
Firms control inside information through insider lists, information barriers and watch and restricted lists. Staff with access to deals face pre-clearance and personal account dealing rules. Trade surveillance systems compare trading against news, announcements and the people who knew in advance. Suspicious trades are reported to the regulator through a suspicious transaction and order report.
Insider dealing damages trust in markets and carries heavy penalties. In the UK it is a criminal offence under the Criminal Justice Act 1993 and a civil offence under UK MAR. The EU prohibits it under MAR and requires member states to criminalise it. In the US it is prosecuted under Rule 10b-5. Firms also face sanctions for weak surveillance or reporting.
The rules
Prohibits insider dealing, recommending or inducing another person to deal, and unlawful disclosure of inside information.
Anyone trading EU-listed instrumentsKeeps the MAR civil prohibition on insider dealing in UK law, enforced by the FCA alongside its criminal powers.
Anyone trading UK-listed instrumentsMakes insider dealing, encouraging another to deal and disclosing inside information criminal offences prosecuted in the UK.
Individuals dealing in price-affected securitiesAdded cooling-off periods and good-faith conditions to the affirmative defence for pre-arranged trading plans under insider trading law.
Officers, directors and others using 10b5-1 trading plansCommon questions
What counts as inside information?
Inside information is precise information that has not been made public, relates directly or indirectly to an issuer or financial instrument, and would be likely to have a significant effect on the price if it were made public.
Is insider dealing the same as insider trading?
Yes. Insider dealing is the term used in UK and EU law, while insider trading is the common US term. Both describe trading on material non-public information, although the legal tests differ between jurisdictions.
What is an insider list?
An insider list records every person with access to inside information about an issuer, with the date and time they gained access. MAR requires issuers and those acting for them to keep these lists and provide them to the regulator on request.
