Government is set to bring in new legislation to give the Bermuda Monetary Authority powers to investigate insider trading and market manipulation and make it a criminal offence.

At the moment, insider trading is not a criminal offence and the Bermuda Stock Exchange has only limited powers to deal with companies that offend.

Now, according to Cheryl-Ann Lister, Chief Executive Officer of the Bermuda Monetary Authority, new powers are to be given to the authority to allow them to investigate and make this kind of dealing illegal.

Mrs. Lister, who changed job titles from Chairman to CEO after Parliament passed a bill restructuring the organisation, said: "We are not saying insider dealing and market manipulation is rampant here and we have got to put a stop to it. It is in the last piece of financial services legislation that we felt we had to implement."

In the past three years, the role of the BMA has expanded to include tighter controls over banks, deposit companies and insurance businesses among others. And legislation not only brought Bermuda more in line with other offshore jurisdictions but has also made bodies more autonomous from the Ministry of Finance.

The final feather in the cap of the BMA will be legislation set to go through some time next year on insider dealing and market manipulation.

Mrs. Lister said: "There are other areas where we have made a commitment to implement a regulatory regime. Insider dealing and market manipulation being the two outstanding areas."

When asked by The Royal Gazette how to legislate against these problems, Mrs. Lister said: "Not very easily. Its been a problem that every jurisdiction has grappled with getting it right.

"We are going see if we can get it as right as possible. It is very difficult. Every jurisdiction has had a problem with precisely dealing with or addressing what is insider dealing and market manipulation. But it is an area of financial dealings that has to be subject to some kind of regulation."

She said there is a need to monitor trading and if they saw a problem or there was evidence of some type of irregular activity, then they could investigate and potentially have powers to gain information."

She added that right now it is technically not a crime and when asked if Police have the power to investigate she said: "Unless it was fraud, no. They could possibly under the auspices of fraud. Unless it is out and out fraud, they have limitations as to how that could be done.

"There are some penalties in the stock exchange rules, but it is not a criminal activity and that is the difference. The stock exchange has its rules to ensure that it doesn't happen and actions that they can take, but it wouldn't be a criminal type and the action they can take would be more against a company."

She said that with the new rules, insider trading will become a criminal act and therefore subject to prosecution.

She added: "Having said all that, I think the market in Bermuda does operate generally in a fair manner where everybody has the ability to trade in the open market. But this ensures that it is open and fair.

"I wouldn't want to cast any aspersions. The reason we have not actively dealt with the issue is because we don't feel that generally it is a problem here. But it is one of those sorts of things that they look at internationally and say well you don't have this legislation, so it is just something that somebody can put an X against you as opposed to us."

And the other piece of legislation the BMA are looking at is the amendment to the Credit Union Act for next year.

Mrs. Lister said: "Basically the CUA hasn't been upgraded in over ten years, so it is to look at similar legislation in other countries and just update it really.

"At the end of the day it may not affect the day-to-day operations in the short run of the credit union whatsoever, but it would be something that possibly the BMA would have more power of enforcement, etc. To afford similar of power that we have in other recently enacted legislation."