UAE imposes ban on insider trading
The move is in line with the provisions of the SCA resolution of 2001 concerning trading, clearing, settlement and transfer of ownership and custody of securities.
A ban on insider trading at public shareholding companies listed in the UAE capital markets took effect on Tuesday in compliance with the regulations and rules issued by the Emirates Securities and Commodities Authority (SCA).
The Abu Dhabi Securities Exchange and Dubai Financial Market have called on listed shareholding companies and brokerage companies to implement the ban until the announcement of the financial statements for the second quarter of 2020.
The move is in line with the provisions of the SCA resolution of 2001 concerning trading, clearing, settlement and transfer of ownership and custody of securities. The SCA is tasked with monitoring and regulating the UAE's financial markets. In March this year, a similar ban was imposed by the SCA in the UAE.
According to article 14 of the resolution, it is not permitted for a company's chairmen, board members, director general of employees who have inside information to trade, either through themselves or through others, in the securities of the same company or any subsidiary, affiliate or allied company if any of those companies are listed on the market. The ban normally lasts for 15 days before the financial statements of the company are released.
A person is defined as an "insider" if they have a relationship with a business that makes them privy to information that has yet to be released to the public. Insiders are expected to maintain a fiduciary relationship with their companies and shareholders, and trying to profit from insider information puts the insider's interests above those of the entities to whom they owe this duty. Insider trading happens when someone with either access to valuable non-public information about a corporation or ownership of stock equaling more than 10 per cent of a firm's equity buy and sell shares.
The SCA monitors illegal insider trading by looking at trading volumes, which increase when there is no news released by or about the company.
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