Market Abuse: Review of RINGA - ACT Response

Comments in response to the consultation FSMA market abuse regime: a review of the sunset clauses

Following the implementation of the Market Abuse Directive the Financial Services and Markets Act (FSMA) prohibits anyone in possession of inside information from dealing (or attempting to deal) in relevant securities or encouraging others to deal.

The definition covers “information in relation to financial instruments or issuers that is precise, not in the public domain and which, if it were made public, would be likely to have a significant effect on the prices of those instruments or on the price of related derivative instruments. Information that would be likely to have a significant effect on prices is information a reasonable investor would be likely to use as part of the basis for his investment decision.” Note that the information must be “precise”.

Prior to this the UK had stricter controls restricting trading in securities by persons possessing relevant information not generally available (RINGA). This wider definition of information, possession of which would debar you from dealing, was preserved (subject to a "sunset clause" cancelling it on 30 June 2008) via the two super-equivalent provisions:

• Section 118(4) of FSMA concerning behaviour not covered by the Directive’s prohibitions on insider dealing. This uses a different definition of information that can be abused, ‘RINGA’ – relevant information not generally available rather than 'inside information' used in the Directive provisions.
• Section 118(8) of FSMA covering behaviour giving rise to false or misleading impressions or distorting markets. This uses a broader range of behaviours than those in the Directive provisions.