Insider dealing

Definition

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 considered to be insider dealing

Surveillance

Effective implementation of surveillance alerts for insider dealing requires capturing the following trade data:

  • trade data

  • reference data for insider information

Often surveillance alerts use large price movements as a proxy to identify events driven by inside information. This is however imperfect, as sometimes inside information may not result in a large absolute price movement.

Reference

Black Edge: Inside Information, Dirty Money, and the Quest to Bring Down the Most Wanted Man on Wall Street

A great account of the largest insider trading investigation in the history of Wall Street.

  • Nominated for the FT/McKinsey Business Book of the Year
  • Nominated for the Carnegie Medal for Excellence in Nonfiction
  • Amazon Top 5 Business Books of 2017

Risk taxonomy

Derived risks

Regulatory source

REGULATION (EU) No 596/2014 OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL, article 8