Prevalence of Insider Trading in Emerging Markets vs Developed Markets


An emerging market is a country that has some characteristics of a developed market, but doesn’t meet standards to be a developed market. This includes countries that may become developed markets in the future or were in the past. The term usually suggests poverty and low level of industrial development and thus it’s the opposite of the term developed nations.  

And this explains why it may take long for such nations to develop insider trading laws. Insider trading rules were laughably lenient in the United Kingdom until 1980. When an economy is young, it often doesn’t have a developed financial services sector with people whose dedicated job is to make markets or trade for a living.  

Markets in such economies have few sources for information about the economy and the individual companies. And so it’s important for inside information to be able to filter its way through to markets. But once an economy is mature, it can forgo these sources of information in the name of more robust markets. 

Emerging markets generally don’t have the level of market efficiency and strict standards in accounting and securities regulation to be on par with advanced economies (such as the United States, Europe and Japan). But emerging markets do typically have a physical financial infrastructure, including banks, a stock exchange and a unified currency And with regard to Insider Trading legal differences among jurisdictions may vary in the way the law is interpreted and applied. 

Emerging Markets include economies such as: Argentina, Brazil, China, India, Indonesia, Mexico, Poland, South Africa, South Korea and Turkey, Egypt, Iran, Nigeria, Pakistan, Russia, Saudi Arabia, Taiwan, and Thailand.  

While countries with developed markets include: Australia, Austria, Belgium, Canada, Cyprus, Denmark, Finland and France.


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