CME-1 Market Integrity & Insider Trading

Question 1

What constitutes 'insider trading' under the Saudi Capital Market Law?

Accepted Answer

Trading in securities based on material, non-public information obtained through a privileged position

Answer

Trading based on publicly available information

Answer

Purchasing shares of a competitor

Answer

Trading during market hours

Question 2

Who qualifies as an 'insider' under CMA rules?

Accepted Answer

Directors, senior executives, employees, and anyone with access to material non-public information due to their position

Answer

Any shareholder

Answer

Only board members

Answer

Foreign investors only

Question 3

What is 'tipping' in the context of insider trading regulations?

Accepted Answer

Passing material non-public information to another person who then trades on it

Answer

Paying a broker commission

Answer

Disclosing information to the CMA

Answer

Publishing a research report

Question 4

What penalties can the CMA impose for insider trading violations?

Accepted Answer

Fines up to three times the profit made or loss avoided, disgorgement of profits, and referral for criminal prosecution

Answer

Warning letter only

Answer

Only licence suspension

Answer

Civil penalties only with no criminal element

Question 5

What is 'front running' in securities markets?

Accepted Answer

A broker trading for its own account ahead of a large client order, profiting from the anticipated price movement

Answer

Placing orders ahead of market open

Answer

Submitting research before public release

Answer

Speed trading by algorithms

Question 6

What is the 'Chinese Wall' concept in a securities firm?

Accepted Answer

Information barriers between departments to prevent the flow of MNPI from advisory to trading divisions

Answer

A physical security barrier

Answer

A regulatory filing requirement

Answer

A market surveillance tool