SGX, partners launch guide to help firms prevent insider trading

SGX said the guide is not meant to be prescriptive or exhaustive, and needs to be customised to each company's unique profile and circumstances.
SGX said the guide is not meant to be prescriptive or exhaustive, and needs to be customised to each company's unique profile and circumstances.PHOTO: REUTERS

SINGAPORE - The Singapore Exchange (SGX), together with 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), has launched a guide on the prevention of insider trading.

The guide contains recommended principles and guidelines to help companies and their advisers to retain control over the flow of confidential information, appropriately restrict staff dealing in the company's securities and create a culture of compliance, SGX said on Tuesday (Dec 5).

In particular, the guide suggests arrangements companies and their advisors can put in place to more effectively deter insider trading.

Some of the areas included in the guide are arrangements for ensuring that confidential information generated and/or received remains confidential until it is reasonably expected to be disclosed under the relevant laws, regulations and the listing rules, 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.

The guide also contains examples on how to implement the recommended principles and guidelines.

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 preemptive 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 areas and help firms avoid minefields.

Lee Fook Chiew, ISCA's CEO, said the guide will enhance trust among stakeholders of a firm or organisation, including its 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.