[JZL003]

Another example which I once posed to a regulator, is satellite information as public permitted insider trading. There are firms who buy satellites imagery (only available commerically, or even paying for a satellite to go to certain locations) to look at the shadows oil storage containers. You can see the relative levels of oil storage to predict the oil market. This is vaguely solvable by adding a false ceiling

But more pernicious, check target parking lots to see how full they are, to predict approximate target's profit before their quarterly releases.

Nominally this is totally public knowledge, but unless you can afford to pay for commercial imagery (or rent where it points) you would never know. Is that really a public market with globally relatively-equivalent knowledge

[tekne]

Counterpoint: isn't this exactly the _point_ of high-medium frequency trading (vs. investment) in the first place? That is, to incentivize people to search for and analyze information in a novel fashion and provide this information to the market through pricing? I feel insider trading itself is not an equality problem, but rather a conflict-of-interest problem, after all (especially if it's, e.g., someone working at a regulator doing the insider trading).

[Nevermark]

Exactly! Reselling at a better estimates of real value make a market more efficient.

In two ways. The immediate is when they buy or sell a miss-priced asset, the other side of the trade benefits from a slightly more accurate price.

Then the market as a whole benefits from reduced risk, as the miss-pricing gets reduced. Whether or not each individual buys, sells, or abstained based on the more accurate valuation.

—

The problem with insiders isn’t that they have unique information on miss-pricing, and are trading on it.

It is that, one, if they are allowed to trade on miss-pricing they are highly incentivized to create it.

And two, they are leveraging the shareholder’s property, the company’s private information, against the shareholders. Despite insiders only having been been given access to that information, explicitly or opportunistically, in order to provide benefits to the shareholders.