12 December 2017
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SGX, stakeholders roll out new guide to prevent insider trading

Business Times
06 Dec 2017
Claire Huang

Collaborative effort lists recommendations and best practices

Singapore companies and their advisers are now better equipped to deter insider trading.

This, as the Singapore Exchange (SGX) and various stakeholders have launched a guide on the prevention of insider trading, listing out recommendations and best practices.

The guide - a culmination of collaboration between SGX and the Association of Banks in Singapore (ABS), the Institute of Singapore Chartered Accountants (Isca), the Law Society of Singapore and the Singapore Institute of Directors (SID) - contains recommended principles and guidelines to help companies and their advisers retain control over the flow of confidential information.

It also suggests ways to strike a balance when it comes to restricting staff dealing in the company's securities and to create a culture of compliance, SGX on Tuesday said.

In particular, the guide touches on arrangements for ensuring confidential information generated and/or received stays confidential until it is reasonably expected to be disclosed under the relevant laws, regulations and the listing rules.

Other areas included in the guide are ways to minimise risks of accidental leakage of confidential information; characteristics of effective trading restrictions on dealings in securities; and how to promote strong awareness of the importance of appropriate handling and control of confidential information.

Examples are also given to illustrate how the principles and guidelines can be put into practice.

SGX said it is not meant to be prescriptive or exhaustive, and needs to be customised to each company's unique profile and circumstances.

Said Tan Boon Gin, CEO of Singapore Exchange Regulation (SGX RegCo): "Insider trading is hard to detect and prosecute as the leakage of inside information occurs covertly in private, off the exchange; the pre-emptive approach is we believe, the best way to deal with this risk. Our partnership with industry participants on this guide is similar to how we worked with member firms on the Trade Surveillance Handbook and Members' Surveillance Dashboard. We look forward to more collaborative efforts with the whole eco-system to take the fight against market misconduct further upstream."

Various stakeholders have also welcomed the move with the director of ABS, Ong-Ang Ai Boon, saying the guide will be invaluable in ensuring best practice standards, while Joyce Koh, executive director of SID pointed out that it will clarify grey zones and help firms avoid minefields.

Lee Fook Chiew, Isca's CEO, noted that the guide would enhance trust among stakeholders of the organisation, including the staff members. "By recognising and minimising the risk of accidental information leaks or misuse of confidential information, business leaders are better equipped to safeguard the interests of organisations and ensure their organisations meet statutory obligations."

Legal professions who deal with confidential material and advise clients on these matters will also find the recommendations useful, noted Adrian Chan, chairman of the Corporate Practice Committee of the Law Society of Singapore.

Source: Business Times © Singapore Press Holdings Ltd. Permission required for reproduction.