Insider Dealing
1. Introduction Insider dealing has been affecting the efficiency of stock markets in different places like United States, United Kingdom and Australia. Hong Kong is of no exception. Basically, insider dealing refers to the trading of a corporation’s stock or other securities by individual with potential access to non-public information of the company. The law of insider dealing in Hong Kong provides a much more detailed definition and is very comprehensive. However, when it comes to enforcement, it seems not very effective. In the following, the law of insider dealing in Hong Kong will be summarized. After analyzing the comprehensiveness of the law, the underlying reasons of the difficulty in enforcement will be identified. Some recommendations will then be made in order to improve the law. These recommendations will be based on the reasons identified, with reference to other jurisdictions.
2. Comprehensiveness of the current law
2.1 Description of the law and its comprehensiveness
Hong Kong is a relatively new player in insider dealing law as there is no law until 2003. Nevertheless, we now have a very comprehensive ordinance concerning the issue. The primary source of the law relating to insider dealing is contained in Parts XIII and XIV of the Securities and Futures Ordinance. The most straightforward and common example when insider dealing takes place is when a person connected with a listed company who has relevant information in relation to that company (which he knows to be relevant information) deals or counsels or procures another to deal in the listed securities of that company or a related corporation or their derivatives, knowing or having reasonable cause to believe that such person would deal in them. The law explains the 4 major concepts, which are “connected person”, “relevant information”, “dealing, counseling, procuring” and “securities and derivatives” of insider dealing very thoroughly.
2.2 Connected person
The Ordinance defines
2. Comprehensiveness of the current law
2.1 Description of the law and its comprehensiveness
Hong Kong is a relatively new player in insider dealing law as there is no law until 2003. Nevertheless, we now have a very comprehensive ordinance concerning the issue. The primary source of the law relating to insider dealing is contained in Parts XIII and XIV of the Securities and Futures Ordinance. The most straightforward and common example when insider dealing takes place is when a person connected with a listed company who has relevant information in relation to that company (which he knows to be relevant information) deals or counsels or procures another to deal in the listed securities of that company or a related corporation or their derivatives, knowing or having reasonable cause to believe that such person would deal in them. The law explains the 4 major concepts, which are “connected person”, “relevant information”, “dealing, counseling, procuring” and “securities and derivatives” of insider dealing very thoroughly.
2.2 Connected person
The Ordinance defines