Market abuse and Reserve requirements: Difference between pages

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imported>Martin ODonovan
(New entry)
 
imported>Doug Williamson
(Expand, from The Treasurer, May 2015, p15, Jeremy Warner.)
 
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Market abuse is the term used to describe any misuse of confidential or non public information so as to attempt to gain a trading advantage.  Market abuse also encompasses: insider dealing;improper disclosure; manipulating transactions; manipulating devices; misleading dissemination.
''Banking''.   


Legislation exists in most financial markets to specify the detail of what is prohibited as market abuse and within the EU this is covered by the Market Abuse Directive ([https://www.esma.europa.eu/system/files/Dir_03_6.pdf Directive 2003/6/EC of the European Parliament and of the Council of 28 January 2003]) and the revised Market Abuse Directive II and the Market Abuse Regulation which are in the process of being enacted in 2014
The minimum ratio of vault cash and balances ('[[reserves]]') with the [[central bank]] to deposits taken by the bank that the central bank requires commercial banks to hold.


An increase in minimum reserve requirements will be likely to lower the supply of money in the economy as banks undertake less lending, and vice versa.


For example trading in a company's shares whilst in the possession of inside information that a profits warning was about to be announced would be insider trading and therefore market abuse.


The greatest possible ratio would be 100%.  This is known as '100% reserve banking'.


== Other links ==
Any smaller ratio is known as 'fractional reserve banking'.
[http://www.treasurers.org/node/3244 ACT briefing note: The New Market Abuse and Disclosure Regime in the UK - A Guide for Listed Companies  August 2005]
 
 
== See also ==
* [[Monetary policy]]

Revision as of 09:56, 8 May 2015

Banking.

The minimum ratio of vault cash and balances ('reserves') with the central bank to deposits taken by the bank that the central bank requires commercial banks to hold.

An increase in minimum reserve requirements will be likely to lower the supply of money in the economy as banks undertake less lending, and vice versa.


The greatest possible ratio would be 100%. This is known as '100% reserve banking'.

Any smaller ratio is known as 'fractional reserve banking'.


See also

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