THE REGULATION OF INSIDER TRADING BY SOUTH AFRICAN AUTHORITIES

Abstract

Insider trading is a practice in which players in the regulated financial markets, stock exchanges or security exchanges make use of information, which is not publicly available, to their advantage. The court in Zietsman and Another v Directorate of Market Abuse and Another 2016 (1) SA 218 (GP) held that in the case of insider trading unfair advantage is obtained from information to the detriment of those not unaware, resulting in the undermining of the integrity of financial markets and investor confidence. South Africa is a significant player in the financial markets. South Africa has five (5) licensed stock exchanges on which companies can list and traders trade. It is on stock exchanges that trading take place and to which regulation of insider trading applies. This dissertation focuses on the regulation of insider trading by South African authorities. This is done by analysing both the historical and current legal framework for regulating insider trading; looking at the mechanisms and tools through which insider trading regulation is enforced; and the responsibilities of each authority in regulating insider trading. For an international perspective, South Africa is compared to the United Kingdoms (UK) and Mauritius to ascertain how these countries regulate insider trading within their jurisdictions. These countries have been chosen for the reason that it is in these jurisdictions where some South African companies are dually-listed alongside the Johannesburg Stock Exchange or to which they have expanded to through acquisitions.