Market Abuse or Insider Trading is the use or disclosure of material non-public information.
Some examples may be:
- Gaining access to confidential information during the underwriting process, such as details about a pending merger or acquisition, where the non-public information is used to trade securities or make personal investments in companies involved in the transaction;
- Sharing of non-public information: Confidential transaction details are shared with affiliated companies or individuals who then trade based on this information.
- A delegated authority being aware of material losses to the managing agent following a natural catastrophe event, where this information is not yet known to the public. The disclosure of this confidential information, or any person acting on, or intending to act on, the information disclosed, may constitute market abuse or insider trading.
The risk of market abuse or insider trading is generally lower, however delegated authorities and managing agents should consider their respective duties of confidentiality, and ensure staff are aware of how confidential information shared between the parties should be managed.