Media Release
MR No. 2025 – 51
The Financial Markets Authority (FMA) - Te Mana Tātai Hokohoko has published an updated educational information sheet that seeks to support stronger practice on insider trading across the investment industry, following industry engagement.
The information sheet is titled Insider Trading: where non-public information relating to a listed issuer (A) comprises material information in relation to another listed issuer (B). It provides context and information on how insider trading laws apply when non-public information about one listed company could materially affect the price of another listed company’s securities.
Executive Director for Response and Enforcement Louise Unger said, “This information sheet is informed by industry feedback on the FMA’s approach following inquiries made by the FMA earlier in the year into the trading conduct of two institutional investors.
“The FMA decided to take an educative approach, rather than an intervention, to clarify for industry how the insider trading prohibitions may apply in these types of circumstances.”
In its mid-year Financial Conduct Report, the FMA signalled its concerns regarding insider trading, following a steady increase in insider trading referrals from NZ RegCo.
In late August, the FMA shared an insider trading report directly with industry and invited engagement.
“The FMA engaged with a number of market participants and supporting stakeholders, who sought meetings on the August report,” said Ms Unger.
“These engagements were open and valuable, with all parties engaging constructively on the issues.
“This revised November information sheet replaces the August report. It reflects feedback seeking more specific context for the August report and further clarity to help minimise its potential for unintended consequences.
“We do not want the safeguards around this type of insider trading to deter legitimate market activity. The updated November information sheet includes risk mitigation strategies that may help investors manage their risk.
“In practice, we consider trading practices related to narrow or specific circumstances, such as material, non-public information about one issuer materially impacting another issuer’s price, would be uncommon.
“The concept has been referred to by some commentators as “shadow insider trading, which is what we called our August report. However, given the potential interpretations around to the breadth or meaning of that term and the development of the concept in other jurisdictions, the FMA has not continued to adopt it in this information sheet.
“The industry response to this revised information sheet has generally been positive, with many acknowledging the FMA for listening and a responsive approach to feedback on the August report.
“We are publishing this information sheet in line with our statutory functions, which include promoting confident and informed participation in New Zealand’s financial markets by businesses, investors and consumers.”
View Insider trading: Where non-public information relating to a listed issuer (A) comprises material information in relation to another listed issuer (B)
ENDS
Media contact:
Ellie Martel
FMA Senior Adviser, Media Relations
[email protected]
021 241 7868
Non-media queries:
[email protected]
