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Thought experiment: Just say Citibank adds the Mexican pesos to their products, USA & international, side by side to all their USD products. If citibank bought

Thought experiment: Just say Citibank adds the Mexican pesos to their products, USA & international, side by side to all their USD products. If citibank bought pesos before the announcement, would they be engaging in insider trading? (Pesos are just for illustrative purposes, replace with your local currency) If so, would every bank need to halt trading in a currency before adding it?

hendzen 9y ago
Pesos are already widely available to retail investors so it isn't really comparable to the situation with BCH. The average US crypto investor is only buying what is available on Coinbase (note that its one of the top apps in the iOS app store...), not jumping through the hoops needed to use Bitfinex, etc. Here's a more appropriate analogy. A penny stock with the symbol BCH is lightly traded over the counter by institutional investors via pink sheets. The New York Stock Exchange decides to list the stock for trading, making it easily available to everyone with a TD-Ameritrade/Robinhood/ETrade account but does so with no pre-announcement. Should NYSE prevent their employees from buying the pink sheet over the counter prior to the announcement?
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notyourday 9y ago
If citi's employees especially those with licenses do that they will lose their licenses and most likely go to jail. Which is why one does not front run based on insider information when one works for that company.
bitxbit 9y ago
fx market is not regulated like that actually. frontrunning is not necessarily illegal.
- candiodari 9y ago
  Exactly. You forget who makes the rules. For instance, employees of the SEC, are not prohibited from trading on insider information (they are to an extent, as in they can't do leveraged short-selling before in investigation is made public, however, for instance, selling out of a position before investigations become public knowledge is obviously common). https://www.institutionalinvestor.com/article/b15dlrvg8cxkmv/study-sec-employees-earn-insider-trading-like-returns https://www.institutionalinvestor.com/article/b15dlrvg8cxkmv... This is like asking "do high-level (and even medium-level) government employees have to pay taxes ?" (I'm European).
ringaroundthetx 9y ago
Nope. Insider trading is a unique prohibition in the equities market, regulated and enforced by the equities regulator. Shoutout to the rich guys that spread the misconception that an information advantage is illegal
thisisit 9y ago
Your thought experiment is flawed at many levels. To look at only one aspect - the question is not on the company (bank) but on people. The answer is Yes. Banks will ban it's employees from buying those pesos because of something called "conflict of interest". It wouldn't matter if the price jumps or not. In fact, a conflict of interest can exist even if there are no improper acts as a result of it. There are no laws against it for cryptocurrencies, yet. But, if something like this happened, it is unfair to Coinbase's customer.
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hendzen 9y ago

Pesos are already widely available to retail investors so it isn't really comparable to the situation with BCH. The average US crypto investor is only buying what is available on Coinbase (note that its one of the top apps in the iOS app store...), not jumping through the hoops needed to use Bitfinex, etc. Here's a more appropriate analogy. A penny stock with the symbol BCH is lightly traded over the counter by institutional investors via pink sheets. The New York Stock Exchange decides to list the stock for trading, making it easily available to everyone with a TD-Ameritrade/Robinhood/ETrade account but does so with no pre-announcement. Should NYSE prevent their employees from buying the pink sheet over the counter prior to the announcement?

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notyourday 9y ago

If citi's employees especially those with licenses do that they will lose their licenses and most likely go to jail. Which is why one does not front run based on insider information when one works for that company.

bitxbit 9y ago

fx market is not regulated like that actually. frontrunning is not necessarily illegal.

candiodari 9y ago
Exactly. You forget who makes the rules. For instance, employees of the SEC, are not prohibited from trading on insider information (they are to an extent, as in they can't do leveraged short-selling before in investigation is made public, however, for instance, selling out of a position before investigations become public knowledge is obviously common). https://www.institutionalinvestor.com/article/b15dlrvg8cxkmv/study-sec-employees-earn-insider-trading-like-returns https://www.institutionalinvestor.com/article/b15dlrvg8cxkmv... This is like asking "do high-level (and even medium-level) government employees have to pay taxes ?" (I'm European).

ringaroundthetx 9y ago

Nope. Insider trading is a unique prohibition in the equities market, regulated and enforced by the equities regulator. Shoutout to the rich guys that spread the misconception that an information advantage is illegal

thisisit 9y ago

Your thought experiment is flawed at many levels. To look at only one aspect - the question is not on the company (bank) but on people. The answer is Yes. Banks will ban it's employees from buying those pesos because of something called "conflict of interest". It wouldn't matter if the price jumps or not. In fact, a conflict of interest can exist even if there are no improper acts as a result of it. There are no laws against it for cryptocurrencies, yet. But, if something like this happened, it is unfair to Coinbase's customer.

deleted 9y ago
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