Glossary term
Inside Information
Subject: Financial Crime, Market Abuse
Also known as: Price-Sensitive Information, UPSI, Unpublished price sensitive information, Material Non-Public Information (MNPI), MNPI
Inside information is precise, non-public information about a company or financial instrument that, if it became known, would be likely to move the price. Using or passing it on can breach market abuse law.
Explanation
Most regimes apply two tests: the information is not public, and it would matter to a reasonable investor deciding whether to buy or sell. Typical examples are unannounced results, mergers, large contracts, regulatory decisions and changes in senior management. Terms differ by place. The EU speaks of inside information, India of unpublished price sensitive information (UPSI), and the United States of material non-public information (MNPI). The tests are close but not identical. Listed companies must announce such information promptly unless a delay is allowed, and keep insider lists of people who know of it before release. Staff handling it are barred from trading and from tipping others. Every insider list, trading ban and disclosure rule in this area hangs on whether a piece of information meets the definition.
Example
A pharmaceutical company’s finance chief learns that a late-stage trial has failed and that the result will be announced next week. The result is precise, not public and likely to cut the share price sharply. Until the announcement, the company logs him and the small team on its insider list, bars them from trading and keeps the draft release in a restricted folder.
Not to be confused with
- Insider Trading
- The use of inside information to trade; the information is the input, not the offence.