The Accomplishment Of Chinese Securities Legislation For Insider Trading

In Chinese securities market, insider trading takes place from time to time, a reflection of both complicated legislation issues and social psychology background. At the legislative point of view, the definitions of insider, insider information and insider transaction are the elements of an insider trading, now some regulations has expanded the definition of traditional insiders to their family members. However, limited by the uncompleted individual information, it is not easy for the securities exchange monitoring section to get a clear picture of each dealer. That is why it is so difficult to prevent them to send out those benefits to their networks. Secondly, subjected to the vague definitions of insider information and congenital information releasing time setting, those who hold many temporary but important could take advantage of the time setting policy to avoid the punishment that legal system should bring and prohibit. For example those funds companies are winning more strong points in Chinese security market, they keep frequent contacts with those public companies, and how to legally use and release the information they get from the listed companies is a good topic. Although the market calls for the defendant should prove his innocent, what we could find are some emergent regulations by China Security Monitor Commission, their commitments on the legislative system are waiting for more witnesses. Only two criminal judgments could be found while no civil indictment has been sued yet.So it calls for an improvement for the legislative frame of insider trading. Although we have a quite complete technological system to track and trace all the real time transactions and find the abnormal cases at first time, we need to make necessary amendments to rules and regulations to fight with the insider trading. Same attentions should be paid to the administrative, civil and criminal measures, and positively explore channels in civil law to protect and help ordinary investors. And collective indictment which is quite popular in the western countries has been proved to be an effective way to protect individual investor. The self-managing security chamber should plays it role in moulding the market, while media coverage and independent investigations are also encouraged for creating a clean and just security market.