UK Criminal Insider Dealing Offence Legislation to be Updated

On April 20, 2023, the draft Insider Dealing (Securities and Regulated Markets) Order 2023 was published (the draft Order). The draft Order will generally align the scope of the U.K.'s criminal insider dealing regime under the Criminal Justice Act 1993 with that of the civil regime under the U.K.'s Market Abuse Regulation and update the criminal regime. The draft Order, which will come into effect 21 days after it is made, will revoke the outdated Insider Dealing (Securities and Regulated Markets) Order 1994 (the 1994 Order).

The CJA 1993 makes insider dealing a criminal offence where the acquisition or disposal of securities occurs on a regulated market, or the dealing occurs by or in reliance on a professional intermediary (e.g., broker), and a person with inside information deals in price-affected securities (dealing offence) or encourages another person to deal in price-affected securities (encouraging offence). It is also an offence for a person to disclose inside information otherwise than in the proper performance of his employment, office or profession (disclosing offense). Securities are "price-affected" where the information, if made public, would be likely to have a significant effect on the price of any securities.

The CJA 1993 sets out the relevant securities and the 1994 Order currently provides the conditions for the insider dealing offence to apply to those securities. The 1994 Order also lists the regulated markets for which the insider dealing offence is relevant.

The criminal offence of insider dealing currently applies to a narrower range of securities than those under the civil regime and has not been updated for many years. The list of regulated markets is also out of date, and some markets have merged, ceased to exist or changed their name.

The draft Order will replace the list of securities in the CJA 1993 with a new one that reflects the financial instruments relevant for U.K. MAR, namely those defined for the purposes of U.K. MiFID under the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001. The offence will also apply to derivatives of these securities.

The draft Order will also update the conditions to be satisfied for the insider dealing offence to apply to the new list of securities, aligning it with the conditions under U.K. MAR. The current list of regulated markets, which names specific regulated markets, will be replaced by one that captures all U.K., EU and Gibraltar regulated markets, OTFs and MTFs. This approach aligns the criminal regime with the civil regime and also prevents the criminal regime becoming out of date in future. NASDAQ and the SIX Swiss Exchange (as renamed) will remain on the list of regulated markets. The New York Stock Exchange will be added.

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