Redefining Insider Dealing Law for Emerging Markets: a Comparative Legal Study

Abstract

The collapse of the so-called communist regimes in eastern Europe and the ending of the cold war have had a significant bearing on the relationships of various subjects of international law. Indeed, not only has the international community witnessed the winds of change in power relations, but also the international community has seen major shifts in patterns of capital formation and relations. We have seen, for example, how through the structural adjustment programmes and the stabilisation packages, international financiers such as the World Bank and the International Monetary Fund have exerted socio-economic and political pressure on developing countries.1 Indeed, in many developing countries where donor instigated economic reforms are being carried out, privatisation and related economic policies such as those on the setting up of stock markets in these countries have been proposed by the international financiers.2 In this paper, it is the efficacy of some of the important legal rules and structures for regulating public distribution of securities on emerging stock markets that are examined. In pursuing this discourse, we will look at two case studies. One case study is taken from Africa and the other from eastern Europe. These two regions represent geographical areas where stock markets are now beginning to emerge, mainly as facilitators of the massive privatisations in the regions. In the study, we will thus look at the efficacy of the laws on insider dealing in Zambia and in Hungary, and then provide an analysis of the theories underpinning the control of insider dealing generally.