Insiderhandel und die Neuordnung der Kapitalmärkte: Ein Beitrag zur Regulierungsdebatte in Europa / Insider Trade and the New Ordering of Capital Markets: A Contribution to the Regulatory Debate in Europe

Will Matthias Georg and Pies Ingo

ORDO. Jahrbuch für die Ordnung von Wirtschaft und Gesellschaft, 2014, vol. 65, issue 1, 159-182

Abstract: This paper develops three arguments for the current academic and political debate on an appropriate regulation of capital markets. (1) To begin with, the paper highlights a conceptual approach to differentiate between socially desirable and undesirable behavior of insider trading. Such trading has socially undesirable effects if it causes rent-seeking behavior of insiders. As a consequence, relevant information will have a black market price. (2) We apply this differentiation to different approaches of capital market regulation. As we will show, a preventive, effective and proportional regulation consists of information and transparency rules in combination with a ban of socially undesirable trading, complemented by whistle blowing. Compared to position limits, such a framework of regulation has socially desirable advantages. (3) Finally, we highlight implications for the current debate about the regulation of European capital markets. In comparison with the USA, the EU still has a backlog and needs to catch up.

Date: 2014
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DOI: 10.1515/ordo-2014-0110

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