INSIDER TRADING HOW JURISDICTIONS REGULATE IT REPORT OF THE EMERGING MARKETS COMMITTEE OF THE INTERNATIONAL ORGANIZATION OF SECURITIES COMMISSIONS MARCH 2003 Table of Contents INTRODUCTION..........................................................................................................................1 PART ONE: A SYNTHESIS OF INSIDER TRADING REGULATIONS.............................1 1. BASIC DEFINITIONS ...............................................................................................................1 1.1. Inside information..........................................................................................................2 1.2. Insider ............................................................................................................................7 1.3. Prohibited activities.......................................................................................................9 1.4. Exemptions...................................................................................................................12 2. THE ROLE OF SUPERVISORY INSTITUTIONS .........................................................................15 2.1. Creating regulations prohibiting insider trading ........................................................15 2.2. Supervisory activity relating to insider trading...........................................................15 2.3. Regulators’ powers to gather information...................................................................16 2.4. Sanctions......................................................................................................................17 2.5. Compensation to investors...........................................................................................18 2.6. Sharing information by supervisory authorities ..........................................................19 2.7. Educational activity. ....................................................................................................19 3. DUTIES OF THE COMPANIES EXPOSED TO INSIDER TRADING ACTIVITY AND OF SROS ..................................................................................................................................20 3.1. Disclosure requirements of issuers..............................................................................20 3.2. Protection of inside information ..................................................................................21 3.3. Disclosure of insiders' trades.......................................................................................21 3.4. Limiting the trading possibilities of insiders ...............................................................21 3.5. Possible actions by the issuer in cases of insider trading activity...............................23 3.6. The role of the SROs ....................................................................................................23 4. CONCLUSIONS.....................................................................................................................23 4.1. Definition of inside information...................................................................................23 4.2. Definition of insider .....................................................................................................24 4.3. Prohibited activities.....................................................................................................25 4.4. Sanctions......................................................................................................................25 4.5. The Powers of Regulators............................................................................................25 4.6. The role of the SROs ....................................................................................................25 PART TWO: THE IMPLEMENTATION OF INSIDER TRADING RULES IN THE LEGISLATION OF PARTICULAR JURISDICTIONS ...............................................27 1. ALBANIA.............................................................................................................................27 2. AUSTRIA .............................................................................................................................28 3. BANGLADESH .....................................................................................................................29 4. BULGARIA...........................................................................................................................30 5. CHINA.................................................................................................................................31 6. CROATIA.............................................................................................................................33 7. CYPRUS...............................................................................................................................34 8. CZECH REPUBLIC ................................................................................................................35 9. DENMARK...........................................................................................................................36 10. FRANCE...............................................................................................................................37 11. FINLAND .............................................................................................................................38 12. GERMANY...........................................................................................................................41 13. HONG KONG .......................................................................................................................44 14. HUNGARY ...........................................................................................................................47 15. INDONESIA ..........................................................................................................................51 16. ITALY..................................................................................................................................53 17. JORDAN...............................................................................................................................54 18. KOREA ................................................................................................................................56 19. LATVIA ...............................................................................................................................59 20. LITHUANIA..........................................................................................................................60 21. LUXEMBOURG.....................................................................................................................61 22. MALAYSIA ..........................................................................................................................63 23. MALTA................................................................................................................................64 24. NORWAY.............................................................................................................................66 25. PARAGUAY .........................................................................................................................67 26. PERU ...................................................................................................................................69 27. POLAND ..............................................................................................................................71 28. PORTUGAL ..........................................................................................................................72 29. SINGAPORE .........................................................................................................................74 30. SLOVAKIA...........................................................................................................................76 31. SLOVENIA ...........................................................................................................................78 32. SOUTH AFRICA ...................................................................................................................81 33. SPAIN..................................................................................................................................83 34. SRI LANKA..........................................................................................................................85 35. CHINESE TAIPEI ..................................................................................................................86 36. THAILAND...........................................................................................................................87 37. TURKEY ..............................................................................................................................88 38. UNITED KINGDOM ..............................................................................................................90 39. UNITED STATES OF AMERICA .............................................................................................92 40. VIETNAM ............................................................................................................................98 41. EUROPEAN UNION DIRECTIVES...........................................................................................99