What Is Insider Trading In The Derivatives Markets?

Law360 (January 12, 2021, 1:10 PM EST) -- In recent months, the U.S. Commodity Futures Trading Commission, the federal agency I lead and that regulates the U.S. derivatives markets, has brought a number of enforcement actions for misconduct known colloquially as insider trading.

This has understandably generated some discussion about what constitutes illegal trading in these markets given that inside information is used every day by market participants to hedge their business risks in a manner that is both lawful and necessary.

As a result, the bar is understandably asking: Where does the CFTC draw the line between legal and illegal use of nonpublic information and why?

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