Market Conduct, Trading Rules and Market Abuse Prohibitions
What this domain tests
This domain tests fair and orderly trading on Boursa Kuwait and the prohibitions on insider dealing, market manipulation and misleading conduct. It also covers order handling, client priority and surveillance expectations.
Core rules and concepts
- Market abuse includes dealing on inside information, tipping inside information, and manipulating or attempting to manipulate the market.
- Inside information is generally precise, non-public information that could materially affect the price of securities. Issuers should control access and disclose material information promptly.
- Manipulation can include false or misleading orders, wash trades, layering, spoofing, price distortion and abusive algorithmic trading.
- Licensed firms must maintain conduct controls: order handling, conflicts management, client priority, best execution where applicable, record-keeping and surveillance escalation.
- The CMA and Boursa Kuwait monitor trading and can require information, suspend trading or refer misconduct for enforcement.
Worked example
An employee learns before announcement that the company will miss earnings and tells a friend to sell shares. The friend sells. The employee has likely committed insider dealing by tipping, and the friend may have dealt on inside information. Liability does not depend on whether the employee personally profited; the disclosure and the trade are both central.
Traps that cost marks
Do not think tipping is acceptable if the recipient does not trade; the improper disclosure itself can be a breach. Do not limit manipulation to face-to-face trading; algorithms and order-book activity count. Do not assume client orders can be used to benefit the firm without proper priority and conflict rules.