Confidentiality of 'Trader Orders' a Key Feature in Financial Markets
The banking system in every country is a barometer of the economy, sectoral soundness, credit rating strength, banking secrecy, protection against breaches, and the integrity and security of customers’ private information. All these indicators place the banking sector at the forefront, making it a destination for the wealthy and those with substantial assets.
Similarly, investors’ transactions in the stock exchange and their activities in general serve as a database of private information no less important than banking data. These data relate to accounts, balances, and the value of wealth. Some of this information is disclosed through official disclosures and public statements, while other parts remain confidential and pertain to various investor segments, ranging from medium-sized investors down to small retail investors.
Information and privacy regarding investors across all segments of the financial market—from individuals to institutions—should be afforded the same level of banking secrecy applied to customers’ funds and accounts in banks.
With technological advancements, protecting information now requires greater effort and deeper, broader investments to prevent unauthorized access to any information that could be exploited to the detriment of others, or to prevent the hacking of information for espionage purposes and the misuse of undisclosed private data.
Consequently, awareness of the importance of spending on information protection must be at the top of the priorities. While some companies focus on climate change, ESG initiatives, International Women’s Day, and green environments, they neglect investment in information security. This is evidenced by cases where companies’ data and systems were breached and funds were misappropriated from their accounts, indicating that certain priorities need to be re-evaluated and reordered.
Confidentiality of investors’ information in stock exchanges offers significant benefits, particularly in protecting privacy and preventing misuse of information. The importance of secrecy in stock exchanges and financial markets increases in line with the following benefits:
2. Reducing fraud and identity theft: The wider the availability of investor data, the higher the risk of its exploitation for fraud or identity theft.
4. Protecting investors’ strategies: Knowledge by others of an investor’s position sizes or trades may reveal their investment strategy, potentially influencing their decisions or affecting security prices.
5. Enhancing market confidence: Investors feel more secure trading in the market when they know their personal and financial data are disclosed only under strict controls.
6. The core idea is the need to balance individual investors’ data confidentiality with market transparency. The market requires access to information that affects investors’ decisions, but it does not necessarily need full disclosure of every investor’s personal details.
7. Protecting the independence of investment decisions: Keeping others unaware of the details of an investor’s portfolio helps them make decisions free from pressure or unlawful interference.
9. Preventing the use of customer data for unlawful purposes: Data confidentiality limits the use of such data for commercial, competitive, or personal purposes unrelated to the original purpose for which the data were collected.
10. Achieving balance with market transparency: Confidentiality does not mean hiding information that the market must know. Certain information, such as significant ownership stakes or material information, must be disclosed by law, while personal and detailed investor data remain protected.
It is worth noting and emphasizing that confidentiality is not absolute in regulated markets. There are situations in which disclosure to regulatory or judicial authorities is required, or in accordance with anti-money laundering and counter-terrorism financing requirements. Additionally, there may be disclosure obligations regarding controlling ownership or major shareholders, as determined by law to protect the market and investors. However, what must be emphasized is the confidentiality of information related to market transactions that do not require disclosure or clarification.
