Are Banks Safe from Insider Trading in Prediction Markets?

Ryne Miller was quoted in the American Banker article, "Are banks safe from insider trading in prediction markets?" that discussed the rules around insider trading in prediction markets and how they might apply to trading traditional securities. Banks are actively reviewing their policies to explicitly address employees' use of prediction markets and lawmakers and regulators are exploring how to oversee risks of insider trading.

Ryne noted that "... financial institutions already prohibit their employees from engaging in fraud, trading on misappropriated information and violating confidentiality agreements. Still, out of an abundance of caution, financial institutions should be — and for the most part, likely already are — thinking about revising policies to specifically address prediction markets."

For banks, Ryne suggested, ""I think it's helpful to look at those policies now and consider whether you need to add something about prediction markets. At the same time, I think the policies, because they're generally principle-based, would already prohibit someone from using company information acquired at work to trade in prediction markets."

Read the full article (subscription required).