The trinity of market regulation: Disclosure, insider trading and market manipulation

A market serves as the forum for the exchange of information about goods, and as securities can be seen as tokens of information on entitlements, securities markets are thus about the exchange of information about information. A major objective of all forms of market regulation is to prevent the detrimental effects following from asymmetries of information; this objective is even more imperative in financial market law because of the special informational character of securities markets. Obliging disclosure, banning the use of material monopolistic information, or banning misinformation may address informational asymmetries. In financial market law this trinity of market regulation is known as disclosure, insider trading and market manipulation, respectively. This paper explores the relationship and interaction of these measures and how they are applied (and sometimes misunderstood) in national law and in European law as stated by the new 2003 Market Abuse Directive.