Convention on Insider Trading

General Information

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What is it about?

Organised stock markets are based primarily on the principles of equal access to information for all market users and the quality of the information provided to investors. Respect for those principles is necessary to ensure fairness in dealings. This Convention is intended to alleviate the difficulties that have emerged at international level in obtaining information and facts and in punishing persons carrying out operations on organised stock market securities that are at variance with those principles. State parties to this Convention agree to exchange information and provide mutual assistance in criminal matters related to insider trading. They also agree to judicial cooperation in that respect. For the purpose of this Convention an irregular operation of insider trading means an operation carried out by a person with privileged information who has effected an operation on an organized stock exchange with a view of securing an advantage for himself or a third party. The provisions of this text do not deal with questions related to punishment of such crimes.

Why is it relevant?

By ratifying this Convention, States adapt themselves to the internationalisation of stock markets and work against infractions committed by insiders on the territory of other States. This Convention is open for signature by State members of the Council of Europe as well as any State invited by the Committee of Ministers (as of 2003, no non-member state of the Council of Europe was party to this instrument).

Additional Information

In September 1989, the Council of Europe adopted a Protocol to the Convention on Insider Trading. It adds Article 16 bis, containing a provision called «disconnection clause» which applies solely to Member States that are also member to the European Union. In their mutual relations, existing rules of the European Union prevail over the rules arising from the present Convention. Secondary legislation of the European Union is considered as a certain type of “internal law” as opposed to “international treaty law”, because it creates harmonized rules applying to a sub-group of Member States to a global treaty. An international treaty prevails over Secondary Union Law, unless explicitly provided otherwise. The present Protocol is an example of such derogation. Member States to the Protocol and the European Union benefit from the uniform application of Secondary Union Law. The present Protocol is open for signature by the Member States to the European Union.

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