Research On Insider Trading With Information Disclosure And Leakage And The Optimal Supervision

In this article,we establish a single period trading model with information leakage and disclosure,and the optimal regulation model of insider disclosure.First,we study trading model with information disclosure and leakage,it include four types of traders :many insiders,many outsiders,a risk neutral market maker,and random noise traders.In this model,we find that,in certain circumstances,in order to maintain their own profit maximization insider traders will take initiatively disclosure of public information for the whole market.At the same time as the number of insider traders increased,the market becomes more stable and the market strength is bigger,but it is less likely that insiders disclose public information.Secondly,we study the best regulatory strategy when insider traders are actively disclosing information,which exclude the outsiders from the model,only leaving three traders.At this point,we find that when there is only one insider trader,the regulators don't carry out regulatory strategy for insider trading.However,when the number of insider traders is more than one person,regulators will impose some regulatory intensity for insider trading.Meanwhile,the participation of regulators will make the market intensity and effectiveness decrease,and the market will be more unstable.