The use of state coercive forces to clearly start the war on insider trading began in the US Securities Act of 1933. Section 16 of the Act was the grandfather clause that prohibited insider trading in the United States and even the world. Hong Kong's regulations on insider trading were late, and it was not until 1974 that criminal penalties and civil remedies for insider trading were stipulated in the then Securities Ordinance. Although it was already late, it is even more regrettable that this clause has not been implemented in practice.

In 1978, the Hong Kong and British government revised the Securities Ordinance and began to systematically regulate insider trading behavior: stipulated the definition of insider trading; established the insider trading tribunal to be responsible for the investigation and trial of insider trading cases; granted the insider trading tribunal and the Securities Regulatory Commissioner the necessary power to conduct investigations. Shortly thereafter, the Hong Kong Financial Secretary submitted the first insider trading case to the insider trading Tribunal on July 12, 1980 in accordance with the authorization of Article 141 (H) of the Securities Ordinance. Since this amendment did not stipulate criminal penalties for insider trading and did not provide civil relief, it is no surprise that this cannot effectively curb insider trading violations in practice. The first insider trading case also ended because of insufficient evidence and the person involved did not constitute insider trading.

In the 1980s, the legislation on anti-insider trading in the UK changed a lot. The Company Act of 1980 regulated insider trading for the first time in Chapter 5, and the subsequent "Company Securities (Insider Trading) Act of 1985" and the Financial Services Act of 1986 further expanded the regulation of insider trading. In this way, Hong Kong, which was deeply influenced by the UK, followed suit and began to make a second revision of the legislation prohibiting insider trading. Based on the above-mentioned legislation in the UK, two major laws governing insider trading were issued in the early 1990s: the Securities (Disclosure of Interest) Ordinance and the Securities (Insider Trading) Ordinance.

It can be said that the stock market crash in 1987 had a significant and far-reaching impact on Hong Kong's securities market, and there are many reasons for the insider trading behaviors of relevant stakeholders. Hong Kong introduced the information disclosure system in 1988 and formulated the Securities (Enterprise Disclosure) Ordinance, but this Ordinance was not declared effective until 1991. The purpose of the Securities (Enterprise Disclosure) Ordinance is to disclose the holdings of insiders and their changes, and prevent insiders from using insider information to engage in securities trading. The Ordinance stipulates that two types of people are negative.

If there is an obligation to disclose interests, the first category is company management personnel, including directors, CEOs, and spouses of major shareholders, minor children and institutions under their control. Both types of personnel have initial disclosure obligations when they start to hold positions or when they begin to obtain corresponding status; after that, if the shares or status changes, continuous information disclosure must be made. As for the content and time to be disclosed, strict compliance must be followed.

The Securities (Disclosure of Interest) Ordinance is actually the first firewall established by Hong Kong to prevent insider exchanges. However, to deal with such a complex illegal act, preventive measures alone are far from being able to do so. After the current firewall is broken, insider trading will encounter more severe legal barriers - the Securities (Insider Trading) Ordinance.

The Securities (Insider Trading) Ordinance came into effect at the same time as the Securities (Disclosure of Interests) Ordinance, and was subsequently revised several times in 1991, 1992, 1994, 1995, 1997 and 1998 to adapt to the development of the securities market and the need to punish insider trading. The Securities (Insider Trading) Ordinance consists of five parts, including the Introduction, Insider Trading, Insider Trading Tribunal, Appeals and Other Miscellaneous 5 parts, Section 36 (there were originally 44 sections, and the Sections 37-44 will be deleted later) and its Annex A-Securities (Insider Trading) (Order Registration) Rules.
Chapter completed!