Leanna Reeves, 08 April 2021
Insider trading must be tackled by regulators to provide a fairer market for small shareholders, particularly since the pandemic caused record levels of retail trading accounts, says Mohammed Rharrabti, senior business analyst at Natixis.
“You can go to a forum and see many people exchange about their trade and shares. If you’re a small shareholder, you will have the opportunity to see all the moves. If you see something gaining 20 percent in a day it could be because of the news and so on, but there will be people that have taken this position 10 days before. This is not normal.” he says.
“We see that move every day, on every exchange, but in the meantime, I don’t see a sign from the FCA or other regulators.”
Front running – despite being legal – must also change, according to Rherrabti. Whilst knowing the market in-depth and selling information on stop-losses, brokers have an advantageous position compared to small shareholders.
“The market is not fair. This is a big thing that must evolve, it’s something that can be put on brokers’ rule of compliance. This way, brokers will not sell information and you do not have market manipulation,” says Rherrabti.
Regulators have yet taken action against the market manipulation in regard to short positions.