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Market Abuse

Market abuse refers to illegal practices that distort financial markets, including insider trading, market manipulation, and dissemination of false or misleading information. These activities undermine market integrity, disrupt price discovery, and harm investors. Regulators, such as the SEC in the U.S. and the FCA in the U.K., enforce strict rules to prevent market abuse and maintain fair and transparent markets.

Example

A company executive trades on non-public information about an upcoming merger, engaging in insider trading, a form of market abuse.

Key points

• Refers to illegal practices like insider trading, market manipulation, and spreading false information.

• Undermines market integrity and disrupts price discovery.

• Regulated by authorities such as the SEC and FCA to ensure fairness in financial markets.

Quick Answers to Curious Questions

Insider trading, market manipulation, and disseminating false information are common forms of market abuse.

It distorts price discovery, undermines market confidence, and unfairly disadvantages investors who are not privy to inside information.

Regulators enforce strict rules, monitor trading activity, and impose penalties on individuals or entities found engaging in illegal practices.

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