Global Developments and Analysis System †MyAssignmenthelp.com

Question: Discuss about the Global Developments and Analysis System. Answer: Introduction Insider trading refers to the buying or selling of the securities of the company by such an individual who has the access to the confidential or material personal information regarding such securities of the company. Depending upon when such trade was made, the insider trading could be lawful or unlawful. Particularly when the material confidential information is still not made public, the trading is illegal. Every jurisdiction has different insider trading norms and in the following parts, the insider trading norms as are applicable in Australia and Hong Kong have been highlighted to draw a comparison between them. The insider trading laws of Australia is covered under Division 3s Part 7.10 of the Corporations Act, 2001. Further, these laws are enforced by the ASIC, i.e., the Australian Securities and Investments Commission. On the other hand, the laws related to insider trading in Hong Kong are covered under Division 4, Part XIII under the civil regime, and for the criminal regime, under Division 2 and Part IV of the Securities and Futures Ordinance[4]. Further, these are controlled by the Securities and Futures Commission of Hong Kong. In both these jurisdictions, there are four traditional premises to validate the exclusion, and these are four are (a) the fiduciary duty theory, (b) the misappropriation or fraud theory, (c) the market integrity theory and (d) the equal access to information theory. The fiduciary duty theory cannot be applied to such an individual who is not lawfully fiduciary for instance the major shareholders. Though, in both the jurisdictions, it was recently observed that it is more based on the market integrity theory and the fraud theory. For Australia, the case of Regina v Xiao[6] was the one in which the MD of the company had confessed to insider trading and got 8 years as jail term which was the longest sentence in insider trading cases in the nation. Here, the emphasis of Hall J was laid on fraud and cheating. Similarly, in the Hong Kong case of HKSAR v Du Jun[7], the Hong Kong Court of Appeal awarded a 6.3 years as jail term based on the English case of Regina v Christopher McQuoid[8] on the basis of cheating/ fraud element. There is a similarity in the central composition of these two systems as the jurisdictions of both these entail civil and criminal provisions, as per which, a beach of insider trading provisions could attract both civil and criminal liabilities. In the Australian Regime, section 1042A of the Corporations Act provides a non-exhaustive definitive of financial products as any such financial product which can be traded on financial market[9]. In the regime of Hong Kong, the prohibition on insider trading is laid down on the derivatives or the listed securities. The listed securities are defined under section 245 of the Securities and Futures Ordinance, which is an exhaustive definitive and has to relate to listed companies[10]. Under both of these regimes, the information which is used needs to have material effect over the prices of the financial product or of securities. In the regime of Hong Kong, save for providing in case the information is in general known, it would likely have a major impact over the prices of the listed securities, does not have further provisions with regards to what the materially affect the price would mean and so, the case laws have to be referred where necessary. On the other hand, in the regime of Australia, the clarity is already given in provisions covered under section 1042D[11] and 1042A[12], where the former section puts a test, which is deemed as succinct, clear and straightforward. Also, for triggering the insider trading sections in the two jurisdictions, it is crucial to show that the confidential information which is utilized by the insider was inside information. And this is a key component of the insider informations definition in both of these regimes, particularl y with respect to the nature of information. The Australian requirement is that the information must not be available in a common manner, and for Hong Kong, the information must not be known to the persons in general manners, who are used to or who are likely to be dealing in the listed securities of that particularly organization[13]. There is a need for connection in the regime under Hong Kong, in between the company and the trader who possessed the insider information[14]. This majorly consisted of five groups of people, i.e., (a) the employees and directors of company, major shareholders, and related companies, (b) the people who had business relationship or were connected by profession, (c) the transactions of the counterparties which were privy to the insider information, (d) the specified individuals and the public officers, and (e) the individuals falling in (a) to (c) category in a period of six months from the particular violation[15]. The Griffiths Report of 1989, in Australian regime put forward the proposal for the elimination of connection obligation and this suggestion was not only upheld, but was also ratified in the law. Hence, under the present day insider trading provisions covered under the Corporations Act, the connection requirement has been given away with. The key difference between the two regimes is in the takeover aspects where the regime of Hong Kong singles out and also makes particularly detailed provisions for the takeover. On the other hand, the same is not done in the regime followed in Australia. Section 270(1)(b) of the Securities and Futures Ordinance specifically covers offeror or bidder of the takeover bid[16]. Conclusion To sum up the key points of this discussion, the insider trading laws of Australia and Hong Kong are majorly similar. However, there are certain aspects in which the insider trading laws of Hong Kong are behind the ones of Australia, particularly due to the dependence on connection. Even though the laws of Australia can be cited as being complex, but this complexity results in an effective framework to be present for the insider trading regime in the nation. Bibliography Ali PU and Gregoriou GN, Insider Trading: Global Developments and Analysis (CRC Press, 2008) Chan HK, Chan RSY, and Ho JKS, Enforcement of insider trading law in Hong Kong: What insights can we learn from recent convictions? (2013) 28 Aust Jnl of Corp Law 271. Donald DC, A Financial Centre for Two Empires: Hong Kong's Corporate, Securities and Tax Laws in its Transition from Britain to China (Cambridge University Press, 2014) Duffy MJ, Insider trading: Addressing the continuing prob-lems of proof (2009) 23 Aust Jnl of Corp Law 149. Yan A, Insider Dealing Law in Hong Kong (2013) Centre for Financial Regulation and Economic Development, Working Paper No. 13 https://dx.doi.org/10.2139/ssrn.2322774