The Capital Market Authority (CMA) emphasizes that trading based on insider information in listed companies is prohibited according to the Capital Market Law and its Implementing Regulations.
Article 50 of the CML states that “Any person who obtains, through family, business or contractual relationship, inside information (hereinafter an “insider”) is prohibited from directly or indirectly trading in the Security related to such information, or to disclose such information to another person with the expectation that such person will trade in such Security.”
Insider information means information obtained by the insider and which is not available to the general public, has not been disclosed, and such information is of the type that a normal person would realize that in view of the nature and content of this information, its release and availability would have a material effect on the price or value of a Security related to such information, and the insider knows that such information is not generally available and that, if it were available, it would have a material effect on the price or value of such Security.
According to Article 5 of CMA’s Market Conduct Regulations, an insider is prohibited from disclosing any inside information to any other person when he knows or should have known that it is possible that such other person may trade in the security related to the inside information. In addition, a person who is not an insider is prohibited from disclosing to any other person any inside information obtained from an insider, when he knows or should have known that it is possible that such other person to whom the disclosure has been made may trade in the security related to the inside information.
As part of its investor awareness efforts to help investors avoid violations, CMA issued a (Guidebook of Examples of Some Violations of the Capital Market Law and its Implementing Regulations).
CMA urges board of directors and those interested in the market to read the CMA’s rules and regulations as well as its investor awareness guidebooks which are available on its website.