CMC 6-2 What is "Inside Information"?
Inside Information" is defined in Article 63(1)(a) as meaning information of a precise nature which:
(a) is not generally available:
(b) relates, directly or indirectly, to one or more
Reporting Entities or the issuer of the Investments concerned or to one or more of the Investments; and
(c) would, if generally available, be likely to have a significant effect on the price of the
Investments or on the price of related investments.
When is information "precise"?
2. To be "
Inside Information", information must be of a precise nature. Article 63(2) states that information is “precise” if it:
(a) indicates circumstances that exist or may reasonably be expected to come into existence or an event that has occurred or may reasonably be expected to occur; and
(b) is specific enough to enable a conclusion to be drawn as to the possible effect of those circumstances or that event on the price of
Investments or related investments.
When is information "generally available"?
3. Information is only "
Inside Information" under the definition in Article 63(1)(a) if it is not generally available. The Markets Law does not define what is meant by "generally available", although Article 63(5) states that information which can be obtained by research or analysis conducted by, or on behalf of, users of a market is to be regarded as being “generally available” to them.
4. The following factors are, in the DFSA's view, likely to indicate that information is "generally available" (and therefore is not
(a) if the information has been the subject of a disclosure to the market in accordance with the rules of the relevant market or a requirement in a law;
(b) if the information is contained in records which are open to inspection by the public;
(c) if the information is otherwise generally available, including through the Internet, or some other publication (including if it is only available on payment of a fee), or is derived from information which has been made public;
(d) if the information can be obtained by observation by members of the public without infringing rights or obligations of privacy, property or confidentiality; or
(e) if the information can be obtained by analysing or developing other information which is generally available.
For example, if a passenger in a vehicle passing a burning factory calls his broker and tells him to sell shares in the company that owns the factory, the passenger will be acting on information which is generally available, since it is information which has been obtained by legitimate means through observation of a public event.
5. It is not relevant, in the DFSA's view, in relation to information referred to in paragraph 4 that:
(a) the information is only generally available outside the
(b) the observation, research or analysis is only achievable by a person with above average financial resources, expertise or competence.
When will information have a "significant effect on price"?
6. Information is only "
Inside Information" under the definition in Article 63(1)(a) if it would be likely to have a significant effect on the price of the Investment or a related investment. Information would be likely to have a "significant effect on price" if and only if it is information of the kind which a reasonable investor would be likely to use as part of the basis of his investment decisions (see Article 63(3)). In the DFSA's view, if information is of a kind which a reasonable investor would be likely to use as part of the basis of his investment decisions, then the "significant effect on price" test will be satisfied.
7. Article 63(4) provides that information about a person's pending orders in relation to an Investment or related investment is also
Inside Information. The DFSA considers that information of the following kinds (referred to in this Code as "Trading Information") relating to pending orders may be Inside Information:
Investments of a particular kind have been or are to be acquired or disposed of, or that their acquisition or disposal is under consideration or the subject of negotiation;
Investments of a particular kind have not been or are not to be acquired or disposed of;
(c) the quantity of
Investments acquired or disposed of or whose acquisition or disposal is under consideration or the subject of negotiation;
(d) the price (or range of prices) at which
Investments have been or are to be acquired or disposed of or the price (or range of prices) at which Investments whose acquisition or disposal is under consideration or the subject of negotiation may be acquired or disposed of; or
(e) the identity of the persons involved or likely to be involved in any capacity in an acquisition or disposal.
8. A person who executes a client order does not contravene Article 58 (insider dealing) provided he complies with certain conditions (see CMC section 6-7 paragraphs 8 and 9).
Carrying out of own trading intention
9. A person will form an intention to deal in an
Investment before doing so. His carrying out of his own intention will not of itself contravene Article 58 (insider dealing).
Derived from GM9/2014 (Made 1st January 2015). [VER1/01-15]