5.9 Listing and the Information Management Regime 211insider dealing include the obligation to draw up insider lists,^371 the obligation to
disclose managers’ dealings,^372 the obligation to disclose beneficial ownership to
shares,^373 and the obligation to disclose inside information.^374
One can say that the fundamental purpose of Community insider dealing and
market manipulation rules is to reduce investors’ perceived risk and transaction
costs. Both can be reduced if investors generally believe that: issuers disclose to
the public all information that is likely to have a significant effect on share
price;^375 information disclosed to investors fulfils the requirement of generic use-
fulness (it is accurate, comprehensive and timely, see Volume I); all investors can
have access to the same information;^376 all investors act in the market for legiti-
mate reasons (requirement of fairness or good faith); and the rule that a party must
not deal on the basis of inside information or manipulate the market is enforced ef-
fectively. The result is that the perceived “market integrity” is increased^377 and the
financing costs are reduced for issuers.^378
Now, the Market Abuse Directive prohibits insider dealing, but it does not pro-
hibit the use of information which is not regarded as inside information. For ex-
ample, information is not inside information if it has already been made public.^379
Neither do the provisions on insider trading prohibit transactions in which in-
side information is not used. For example, the prohibition to use inside informa-
tion does not apply to “transactions conducted in the discharge of an obligation
that has become due to acquire or dispose of financial instruments where that ob-
ligation results from an agreement concluded before the person concerned pos-
sessed inside information”.^380
Information can be inside information only in the context of “one or more issu-
ers of financial instruments” or “one or more financial instruments” to which it di-
rectly or indirectly “relates”. “Relating” is a flexible concept. CESR’s July 2007
Guidance contains a non-exhaustive and indicative list of information which di-
rectly or indirectly concerns the issuer.
(^371) Article 6(3) of Directive 2003/6/EC (Directive on market abuse) and Article 5 of Direc-
tive 2004/72/EC. Article 10 can lead to multiple and over-lapping insider-list obligations
in different Member States. See Moloney N, EC Securities Law. OUP, Oxford (2008) pp
976–977.
(^372) Article 6(4) of Directive 2003/6/EC (Directive on market abuse) and Article 6 of Direc-
tive 2004/72/EC.
(^373) Article 9(1) of Directive 2004/109/EC (Transparency Directive).
(^374) Davies PL, Gower and Davies’ Principles of Modern Company Law, Seventh Edition.
Sweet & Maxwell, London (2003) pp 752–753.
(^375) Article 6(1) of Directive 2003/6/EC (Directive on market abuse).
(^376) Articles 1(1) and 6(1) of Directive 2003/6/EC (Directive on market abuse); Articles 4, 5
and 6 of Directive 2004/109/EC (Transparency Directive); Articles 68(1) and 21(1) of
Directive 2001/34/EC (Listing Directive).
(^377) See already In the Matter of Cady, Roberts & Co., an early SEC case.
(^378) See Bhattacharya U, Daouk H, The World Price of Insider Trading, J Fin 57 (2002) pp
75–108.
(^379) Article 1(1) of Directive 2003/6/EC (Directive on market abuse).
(^380) Article 2(3) of Directive 2003/6/EC (Directive on market abuse).