| Insider trading regulation that derived from the stock market has been expanding,either in theory or practice,into the domain of bonds,options,commodity,carbon emission allowance,derivatives like Credit Default Swap,Contract for Difference and Spread Bets,Crypto-Asset like Bitcoin,High-Frequency Trading that goes beyond specific financial instrument and trading places,and even non-financial instruments that with prominent financial features like real estate and high-end arts.During this expansion,the laws are constantly facing multiple dilemmas,such as value turbulence caused by deregulation theories,the inapplicability of stock-oriented rules,insufficient differentiation of the determinants,and the absence of proper consideration of the specificities of non-stock financial instruments.Especially,the predominance of stock-oriented regulation logic and rules is constantly being challenged,while the appeal to realize consistency inside and outside the stock market is repeated.Outside the stock market,however,researches and proposals on insider trading regulation have varying degrees of limited perspective.They either focus on a specific financial instrument/market or are based on a certain department of law,such as securities law,company law,criminal law,and consumer protection law.To put it in a nutshell,expanding insider trading regulation outside the stock market is becoming a financial law issue that goes beyond the dichotomies of “stock and non-equity securities”,“securities and commodity/futures”,“stock exchange and over the counter market”,“spot market and derivative market”,revealing the structural defeats of our insider trading prohibition regime.With the development of the financial market and innovations,these flaws will be gradually exposed and constantly criticized,calling for systematic reform.Therefore,it is imperative to jointly explore whether insider trading outside the stock market should be regulated,should we take on a unified or differentiated approach,where is the boundary of the regulatory domain.These are the questions that urgently need to be answered.To fully reveal the practical and theoretical conflicts during this expansion,this thesis adopts a narrative structure of “inside and outside the stock market”,takes “regulating insider trading outside the stock market” as its topic,employs methods of empirical and comparative analysis,and explores its background knowledge,theoretical contends,current landscape,systematic dilemmas,and expansion approach respectively,hoping to realize effective and efficient regulation with a clear domain.Apart from the introduction and epilogue that answer the question of why emphasize “outside the stock market”,explaining the origin,significances,limitations,and the future of the research,this thesis has the following five chapters.The first chapter is the basic perception about regulating insider trading outside the stock market.This chapter does not adopt the traditional method of “inside information-insider-insider trading” to circularly define insider trading outside the stock market.Instead,it tries to specify its subject matter by “differentiated” and “historic”perspectives.On one hand,the “differentiated” perspective is aimed to promote the understanding of insider trading that happens outside the stock market by comparing it with similar concepts like informed trading,trading using non-public material information other than inside information,and cross-market insider trading.On the other hand,the “historic”perspective refers to a pattern of difference sequence formed during the expansion of insider trading regulation from stock to non-stock items in theory and practice.It presents the arising controversies,and the efforts to regulate insider trading in the areas like bonds,commodity futures,other derivatives like Credit Default Swap and Contract for Difference and Spread Bets,Crypto-Asset like Bitcoin,High-Frequency Trading that goes beyond specific financial instrument and trading places,and even non-financial instruments that with prominent financial features like real estate and high-end arts.The second chapter attempts to summarize the theoretical debates on the regulation of insider trading outside the stock market and answer the question of whether it should be regulated or not.Since the establishment of insider trading law in the stock market gives a positive initial answer to this question,this part classifies the theoretical arguments outside the stock market into two categories: arguments in favor of deregulation and arguments in favor of regulation.The deregulation arguments mainly focus on the falsification of the traditional reasons for regulation and the justification of insider trading outside the stock market.At the same time,the arguments in favor of regulation try to prove the legitimacy of regulation and to refute the deregulation arguments.Although the arguments in favor of regulation have a consensus on expanding the scope of inside information,they disagreed on whether the regulatory approach should be differentiated or unified.However,the differences between inside and outside of the stock market mentioned in this theoretical controversy are over-emphasized.They are not enough to justify the legitimacy of inside trading outside the stock market.Therefore,the chapter chooses to make a value judgment that insider tradings outside the stock market should be regulated,and objectively weights the contribution and limitation of the related arguments.The third chapter systematically combs the current landscape of insider trading regulation outside the stock market.First of all,by comparing the non-stock financial instruments covered by and the flexibility of the insider trading laws in majors jurisdictions like the U.S.,EU,and China,this part explores the room for China to expand the scope of non-stock financial instruments covered by the laws.Then,the chapter tries to explain why the cases of insider trading outside the stock market are especially rare in China,it expounds mainly from three aspects: Economics,application of laws,and China’s compulsory institutional change development model.At last,the chapter points out the practical need of extending insider trading regulation out of the stock market,since the loopholes are gradually appearing,marketization and rule of law have replaced the government’s dominance and become the keynote of financial market development and regulation,and the integrations of stocks and bonds,exchange market and OTC market,spot market derivatives,domestic and foreign market are demanding more and more consistency.The fourth chapter aims to decompose the dilemmas that China is facing when apply insider trading laws to non-stock financial instruments.This chapter unfolds from three aspects,namely determining the nature of inside trading,anchoring the law’s guiding value(s),and applying the laws.Firstly,either inside or outside the stock market,whether insider trading is morally impermissible and what exactly is morally wrong with it are still puzzling.Secondly,the binary opposition between values of anti-fraud and market integrity,and the turbulence of traditional grounds like fairness and market confidence,are dampening the grounds for regulating insider trading outside the stock market,and further causing the suspension of multiple values and confusion of regulation logics in practice.Thirdly,the doctrinal inapplicability of stock-oriented rules is the most intuitive difficulties the laws facing when marching out from the stock market,namely,the limited scope of application,the confusing and clumsy liability theories,the inflexibility and confusing standards of inside information rules,negligence of non-centralized trading pattern,and lack of differentiated sanctions.The fifth chapter explores the possible approach(s)to regulate insider trading outside the stock market.Rather than seeing insider trading law as a tool to ensure the integrity of the disclosure regime,or as a supplementary layer of protection when the contract law protection is inadequate,this chapter proposes a fair competition approach that seems more reasonable and more comprehensive,at least from a macro perspective of “inside and outside the stock market”.It is consistent with the unfair competition nature of insider trading and can clarify the moral origin of its regulation.Insider trading is a kind of anti-competitive behavior to obtain and abuse information advantage.Fair competition can serve as a value bridge for anti-fraud and market integrity,organizing other values.it also fits China’s reality that is emphasizing the fundamental position of competition policy.From the perspective of the development of insider trading regulation,the regime has shifted the paradigm from dogmatics centered on inside information to objective standards of fair access and usage of information.To achieve regulatory consistency,laws,administrative regulations,departmental regulations,market rules,customs,and contracts should all be included as the objective criteria of fair access or usage information.Upon that,China should take fair competition as the core value of insider trading laws to guide the unification and differentiation whereof.On the one hand,fair competition should be recognized as a legislative and regulatory objective in financial law and regulation,the competition enforcement power of financial regulatory authorities should be clarified.Then,the unification of insider trading laws should be done in stages,and a centralized exemption system should be established to clarify the regulatory boundaries so that certain instruments,markets,subjects,and behavior can be exempted when they have no negative effect on competition.On the other hand,differential treatments should be tendered according to the specificities of various non-stock financial instruments and markets,such as considering whether certain participants should be exempted,establishing the differential determinants and non-exhaustive indicative list of inside information,conducting information regulation around the market sounding in the non-centralized trading markets,and to reasonably set up the differential sanction standard and measures. |
