Market Integrity & Insider Trading Flashcards
6 cards from real CME-1 practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 Market Integrity & Insider Trading flashcards as text
What is the 'selective disclosure' rule under CMA regulations?
Answer: Prohibiting companies from disclosing material information to select individuals before announcing it to the public
Selective disclosure rules prohibit companies from sharing MNPI with selected parties (analysts, institutional investors) before public announcement, ensuring equal information access.
What is the CMA's approach to 'layering' in high-frequency trading?
Answer: Prohibited: repeatedly placing and cancelling orders at multiple price levels to manipulate order books is market manipulation
Layering is a form of market manipulation involving rapid placement and cancellation of orders to create a false impression of market depth, distorting prices.
What is the significance of the 'record date' for dividend eligibility on the Saudi Exchange?
Answer: The date by which an investor must hold shares to qualify for the upcoming dividend
The record date determines which shareholders are entitled to a declared dividend; investors must own shares by this date to be eligible for the payment.
What constitutes 'false or misleading statements' under CMA Market Conduct Regulations?
Answer: Making or disseminating false or deceptive statements about a security or issuer that could induce others to trade or affect the price
Disseminating false or misleading information about a security or company with intent to influence trading decisions or prices constitutes a serious market conduct violation.
What is the role of the CMA's Enforcement Department?
Answer: Investigating violations of the Capital Market Law and regulations and initiating disciplinary or criminal proceedings
The Enforcement Department investigates potential violations, conducts formal investigations, and recommends disciplinary action including fines, licence sanctions, and criminal referrals.
What is the obligation of a licensed person who discovers that one of its employees has engaged in insider trading?
Answer: Report the violation to the CMA and cooperate fully with any resulting investigation
Licensed firms are obligated to report discovered violations by employees to the CMA and must not conceal or suppress evidence of misconduct under CMA rules.
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