Exchange Trading Rules, Surveillance and Insider Trading
36 Pages Posted: 11 Jun 2012
Date Written: November 18, 2011
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-June 2011. Using new indices for market manipulation, insider trading, and broker-agency conflict based on the specific provisions in the trading rules of each stock exchange, along with surveillance of such rules, we show that differences in exchange trading rules and surveillance over time and across markets significantly affect the frequency and severity of insider trading. Surveillance reduces the number of cases and profits per case. Exchange trading rules reduce the number of cases but increase the profits per case.
Keywords: Insider trading, Surveillance, Exchange Trading Rules, Law and Finance
JEL Classification: G12, G14, G18, K22
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