Insider Trading of Derivatives Won't Be `Tolerated'

Dec. 13 (Bloomberg) -- A group of 12 securities industry associations issued a joint statement today saying the use of material nonpublic information when trading credit derivatives won't be ``tolerated.''
The statement from the International Swaps and Derivatives Association, Securities Industry and Financial Market Association and the other groups follows what some investors and traders have called suspicious trading in credit derivatives before announcements of takeovers and other events that can change the perceptions of a borrower's ability to meet debt payments.
The groups said they have adequate procedures in place to guard against improper trading in the unregulated market for credit derivatives and other markets including loans that are privately negotiated between banks and investors and not traded over an exchange. They will ``educate'' and ``inform'' members about how to handle information that hasn't been publicly disclosed that could influence markets, they said.