1. Introduction

The regulation on insiders' trading issues was introduced for the first time to the Kingdom of Bahrain's capital market by Resolution No. 3/1990, which was published in the Official Gazette on 22nd May 1990.

The Bahrain Monetary Agency has prepared these Guidelines on Insiders' Holdings and Dealings in Securities (hereinafter called the "Guidelines") for the use of listed companies, brokerage firms, and other securities intermediary service providers in the securities market in the Kingdom of Bahrain, for the purpose of clarifying the legal and administrative requirements for handling the insiders' holdings and dealings in the listed companies' securities.

Since insider trading undermines investors' confidence in the fairness and integrity of the securities markets, securities regulators all over the world have treated the detection and prosecution of insider trading violations as one of their enforcement priorities.

As a guiding principle, inside information shall be strictly confidential until published or otherwise made publicly available in the market. Inside information shall not be used in any manner to gain economic benefit (maximize profit or expected profit, and/or avoid or minimize losses or expected losses) for an insider himself or for another person.

Moreover, these Guidelines are considered as part of the Bahrain Monetary Agency's policy to develop the regulation and practices relating to the risk management systems and controls within the listed companies and brokerage firms.

The purpose of these Guidelines shall be to unify and intensify the handling of insider-trading issues in listed companies and thus increase confidence in the operations of the securities markets. The trading practices of the insiders shall be such that they do not undermine such confidence.

It is imperative that the insiders understand the details of these Guidelines and in particular, the implications of failing to follow these Guidelines. If any insider is in any doubt, he must contact the board's Committee or the person in charge for more clarification.

These Guidelines shall be considered as basic instructions on the handling of insider-trading issues, as well as serving to outline an insider's duty to declare and restrict trading in their listed companies' securities.

Therefore, the listed companies shall supplement these Guidelines with their own additional instructions and restrictions.

These Guidelines reflect common practices exercised by prudently managed listed companies. Many listed companies are already meeting these requirements and therefore the benefits of the Guidelines in terms of enhanced public confidence will be more than proportionate to the cost.