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CS Professional · IFSCA - Regulations, Listing and Compliances · Capital Market Intermediaries

Meridian Securities IFSC, a registered intermediary, holds non-public information that a client's listed issuer will announce a large order win tomorrow. A dealer proposes buying shares for the firm's proprietary account today. What is the correct position under the code of conduct?

It is not permissible. A registered intermediary must act with integrity and must not trade on or misuse unpublished price-sensitive information. Small size, later disclosure or assigning another dealer does not remove the breach, because the firm itself possesses the confidential information.

  1. APermissible if the purchase is small relative to the firm's capital
  2. BPermissible if the firm discloses the purchase to the exchange afterwards
  3. CNot permissible, since an intermediary must not trade on or misuse unpublished price-sensitive informationCorrect
  4. DPermissible if a separate dealer, not the one with the information, places the order

Explanation

Intermediaries must observe high standards of integrity and must not deal on unpublished price-sensitive information or otherwise misuse it. Size, later disclosure or using another dealer does not cure the misuse, so those options fail.

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