The Canadian Securities Administrators reports that it is taking several parallel tracks to help stomp out the problem of illegal insider trading in Canada.
Last year, a CSA task force on the issue published a report containing recommendations for combating illegal insider trading by proposing:
- measures to prevent leakage of and trading on material information prior to general dissemination;
- better mechanisms to detect illegal insider trading through market surveillance, data-mining, inter-agency information-sharing and handling of traditional tips and complaints; and
- stronger deterrents to illegal insider trading through legislative and administrative changes to streamline administrative action and criminal and quasi-criminal prosecution.
The CSA says it has accepted most of the report’s recommendations, several of them in modified form, and is continuing to review several others. Some recommendations have already been implemented and others will be implemented between now and March 2007, it reports.
The regulatory umbrella agency reports that it is already working with professional bodies and financial institutions regulators to develop best practices for information containment for law firms, accounting firms, and banks, all of which regularly deal with material information not disclosed to the public. The CSA says it plans to introduce a national rule to provide guidelines to registrants for policies and procedures concerning undisclosed material information.
It is denying or limiting access to Canada’s markets through foreign jurisdictions with unsatisfactory regulatory regimes; requiring exchanges to disclose the volume of trading by insiders at the end of each trading day; and, enhancing coordination among exchanges monitoring trading of inter-listed securities.
As well, the CSA aims to strengthen the “culture of compliance” practices for market intermediaries such as brokers and dealers.