Research On Materiality Standard Of Inside Information On Chinese Securities Markets

Compared with the Reasonable Investors Decision-making Standard (RIDS)created by common law in US and Price Sensitivity Standard (PSS) stipulated in mostcountries,"inside information" in China refers to the information that concerns thebusiness or finance of a company, have a major effect on the market price of thesecurities thereof and that hasn’t been publicized in securities trading. Given differentdefinition of "Materiality" in different countries, existing analysis of the "Materiality"focuses on how to choose a proper standard among RIDS and PSS through listingmerits and demerits. On the other hand, the wording "have a major effect on themarket price of the securities" in China is inconsistent with European Law, underwhich "Significant" refers to "would be likely to have a significant effect on the priceof the transferable security or securities in question". Therefore, the interpretation ofMateriality under Chinese Law is in hot discussion.Combined with all cases regarding insider trading which is published by CSRC（China Securities Regulatory Commission）and local courts, this paper summarizedthe characteristics of inside information and led to the question whether the actualprice fluctuation is requisite to define Materiality. This paper aims to analyzeconnotative meaning and relationship of RIDS and PSS, discuss the role the actualprice fluctuation plays in insider trading. Based on the development of Insider TradingRegulation in US, this paper intends to find out the legislative intent for insider trading, and determine the Materiality Standard via means-end analysis.There are six Chapters in this paper:Chapter I summarizes current research results on definition of Materiality, andpresents three different standard which forms the basis of this paper;Chapter II demonstrates status quo of Chinese legislation and judicial practices,illustrate the possibilities in interpreting Materiality due to the vague wording andthe inconsistence in different terms under the same law, and show the attitude ofauthority in affirming inside information.;Chapter III exhibit legislation models and provisions regarding "Materiality" inUS, Europe, Japan, Singapore and so on, analyzes legal practices thereunder toprovides points and reference for the following Chapter;Chapter IV analyzes connotation of different Materiality standard beyond literalmeaning, and uses means-end analysis to find out the proper Materiality standardbased on the US insider trading regulation development;Chapter V makes a reasonable interpretation of Materiality for Chinese law basedon the above research;Chapter VI makes conclusion and presents suggestions to legislation in China...