PDSnet Glossary

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Definition

An action or activity which is illegal. In the context of the JSE this usually means some form of market abuse or insider trading. The JSE has published a booklet on insider trading and market abuse which can be found at:
<a href="https://www.jse.co.za/regulation/markets-regulation/market-regulation">https://www.jse.co.za/regulation/markets-regulation/market-regulation</a>
In practice, insider trading goes on in most markets around the world and the JSE is no exception. The problem is that it is very difficult to prove conclusively. In most companies when something happens which will have a significant impact on the share's price there is inevitably a small group of people who know about it before the rest of the market. Almost without fail some of these people will take advantage of their inside information to trade, usually indirectly through a friend or relative, in the share. From a private investor's perspective, this type of insider trading can be seen in the market action of the share and the volumes of shares changing hands. Typically, small increases in price accompanied by massive increases in volume traded is a sure sign of insider trading. Somebody knows something and they are busy buying up loosely held shares before that information becomes common knowledge. The on balance volume (OBV) indicator in your software will highlight such activity with a sharp upward spike.

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