Insider Trading in Forex

Asuming you have prior knowledge of a major event that will move currency, and you act on that, making a large profit, how would you be tracked down?

Isn't the forex market decentralized? You can't even get the volume for any given day, much less who made the trade connected to a certain volume.

Not only that, but there's also so much money sloshing around the FX market that a 2 million dollar inside trade would hardly raise an eyebrow.

Hell, couldn't you short the dollar, blow up the Empire State Building, take your profit, and never be tracked down?

Is FX the perfect market for shady dealings? Oh, and given the insane leverage offered, doesn't that make it perfect for someone making a rigged bet?

 

A 2Mil trade would just disapear into the 1Trillion that is done every day.

 

Forensic Accounting


I wouldn't try it if I was you.

 

Quite ambiguous, would you please rephrase?

 

I dont know, while a fair chunk of cash for most people, in the grand scheme of things buying or selling USD, Eur, GBP, whatever, 2Mil just fades into the background noise. If something was to hypothetically happen say tomorrow, or next week (that you know was going to happen). Would someones 2Mil trade stand out from the other trades where the MIN interbank trade size is like 1Mil? It would be like buying/selling 2 ES contracts.

 

Thanks, but my question was purely hypothetical.

 

Right, and where would investigators even start to look?

If it's the U.S. market they're investigating, they'll review the suspicious trades, trace them to whatever brokerage, then get the info of who did it.

Where would they look in forex? There are people all over the world trading 24 hours a day. And like you mentioned, how would you even tag certain trades as suspicious given the huge volume traded daily?

 

first, a person would have to know what the result of the event would be. Theres only 2 choices, up or down, and neither is obvious.

A bombing could rally the dollar for all u know.

 

A major terrorist bombing in the U.S. would rally the dollar? How's that?

 

Is there even an insider trading law in forex??? I'm not sure, but I don't think there is. So, I think that insider trading is probably perfectly legal.

Anyways, even if insider trading in forex is illegal in the US, in some other countries it may not be, so whose laws would you go by? You know, in certain countries insider trading in equities is not illegal. So I would tend to think that insider trading in forex is legal since it is not centralized in one country, thus no one really has jurisdiction over it. It may however, be against the rules depending on the country you live in, to leak priviledged information, but someone trading on this information in another country where insider trading is not illegal would be fine. Or someone leaking information that lives where there are no insider trading laws would be fine too. Basically, I highly doubt that it is illegal to insider trade forex.