Exchange Trading Rules, Surveillance, and Insider Trading
Douglas J. Cumming
York University - Schulich School of Business
John Carroll University - Boler School of Business
Michael J. Aitken
UNSW Australia Business School, School of Banking and Finance; Financial Research Network (FIRN)
October 15, 2013
We examine the impact of stock exchange trading rules and surveillance on the frequency and severity of suspected insider trading cases in 22 stock exchanges around the world over the period January 2003 through June 2011. Using new indices for market manipulation, insider trading, and broker-agency conflict based on the specific provisions of the trading rules of each stock exchange, along with surveillance to detect non-compliance with such rules, we show that more detailed exchange trading rules and surveillance over time and across markets significantly reduce the number of cases, but increase the profits per case.
Number of Pages in PDF File: 52
Keywords: Insider trading, Surveillance, Exchange Trading Rules, Law and Finance
JEL Classification: G12, G14, G18, K22
Date posted: July 7, 2012 ; Last revised: October 29, 2013
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