Glossary

Compliance guidelines

Rules governing the behaviour of brokerage houses and companies which, through their activities, have access to inside information

Companies and their staff who have access to inside information must observe certain regulations with regard to securities trading. The Securities Trading Act stipulates that a compliance system must be established – among other things, the company must set up a Chinese Wall, appoint a compliance officer, and maintain an observation log as well as a list of blocked securities.

The observation log lists securities with respect to which the company has insider information. In principle, the company or its employees can trade these securities – however, all trades are scrutinised to determine if the transacting parties took advantage of inside information.

Blocked securities are those which the company has information about that could greatly impact the price of the security. The company and its employees are not permitted to trade in these securities.

In addition, the company is obligated to establish a Chinese Wall to prevent inside information from being leaked to the outside.

Also see:  Securities Trading Act, Trade
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