Efforts to counter the scourge of insider trading have gone up a gear with the release of a guide outlining ways it can be prevented.
The guide details how companies and their advisers can retain control over the flow of confidential information, appropriately restrict staff dealing in the firm's securities and create a culture of compliance, the Singapore Exchange (SGX) said yesterday.
It also suggests arrangements that can be put in place to more effectively deter insider trading.
These include ways to ensure that certain information remains confidential until it is reasonably expected to be disclosed under the relevant laws, and ways to minimise risks of accidental leakage of this sort of data.
There are suggestions as well on how to promote strong awareness of the importance of appropriate handling and control of market-sensitive information.
There are also examples on how to implement the recommended principles and guidelines.
The guide was compiled by the SGX with the Association of Banks in Singapore (ABS), Institute of Singapore Chartered Accountants (ISCA), Law Society of Singapore and Singapore Institute of Directors (SID).
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.
MR TAN BOON GIN, chief executive of Singapore Exchange Regulation.
The SGX said it is not meant to be prescriptive or exhaustive, and needs to be customised to each company's unique profile and circumstances.
Mr Tan Boon Gin, chief executive of Singapore Exchange Regulation, said: "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.
"We look forward to more collaborative efforts with the whole ecosystem to take the fight against market misconduct further upstream."
Various stakeholders have welcomed the move.
ABS director Ong-Ang Ai Boon said the guide will be invaluable in ensuring best practice standards, while SID executive director Joyce Koh pointed out that it will clarify grey areas and help firms avoid minefields.
ISCA chief executive Lee Fook Chiew said the guide will enhance trust among stakeholders of a firm or organisation, including its staff.
"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," he added.
Legal professionals who deal with confidential material and advise clients on these matters will also find the recommendations useful, noted Mr Adrian Chan, chairman of the Corporate Practice Committee of the Law Society of Singapore.