Key Issues (pages 9-10)
1. The regulation of trading in secondary and other markets should prohibit: market
manipulation (or attempts at manipulation); misleading conduct; insider trading; and other
fraudulent or deceptive conduct, and apply adequate, proportionate, and dissuasive
sanctions.
2. The regulator should ensure that there are in place arrangements for the continuous
monitoring of trading. These arrangements should trigger inquiry whenever unusual and
potentially improper trading occurs. Market authorities should have rules, compliance
programs, sanctioning policies and powers to prohibit, detect, prevent and deter abusive
practices on their markets, including manipulation (or attempts at manipulation) of the
market.
3. Regulation should cover cross-market conduct where, for example, the price of an equity
product could be manipulated through the trading of options, warrants or OTC derivatives
or other derivative products. The regulator should also work collectively and take any steps
that would be appropriate to strengthen its cross-border surveillance capabilities.
4. There must be adequate information sharing between relevant regulatory authorities,
sufficient to ensure effective enforcement.
5. Authorities responsible for the supervision of commodity derivatives markets (e.g., either
the market, a governmental regulator or an SRO) should have the authority to access
information on a routine and non-routine basis that permits them to reconstruct
transactions, identify large concentrations of positions, and the overall composition of the
market, including the power to access on an “as needed” basis information on the size and
beneficial ownership of a trader’s related financial and underlying market positions in order
to aggregate positions held under common ownership and control.
Is it a preventive or corrective profession? (page 12)
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