How precise must information be to constitute inside information? The European Court of Justice (ECJ) recently issued a preliminary ruling on this issue.


According to Article 1(1) of EU Directive 2003/6/EC, 'inside information' is partly defined as "information of precise nature which has not been made public". A French court referred the following question to the ECJ for a preliminary ruling:

"Must point (1) of Article 1 of Directive 2003/6 and Article 1(1) of Directive 2003/124 be interpreted as meaning that only information in respect of which it may be determined, with a sufficient degree of probability, that, once it is made public, its potential effect on the prices of the financial instruments concerned will be in a particular direction may constitute inside information?"


The ECJ stated that the relevant definition of 'inside information' comprises four essential elements and only the first element – the precise nature of the information – was relevant for the question. The ECJ further stated that it is not apparent from the wording of the article that it should be construed in the manner asked by the French court. According to the ECJ, it is "enough that the information be sufficiently exact or specific to constitute a basis on which to assess whether the set of circumstances or the event in question is likely to have a significant effect on the price of the financial instrument". In addition, the increased complexity of the financial markets makes it difficult to evaluate the direction of prices in different instruments. Therefore, if information is considered to be precise only if it is possible to anticipate the direction of the prices of the relevant instrument, this could result in holders of the information using this uncertainty to refrain from making the information public, thereby profiting from the information. Therefore, the ECJ gave a negative answer to the referred question.


The ECJ's interpretation of 'inside information' follows the general scheme and purpose of the directive: if inside information is not made public, this could lead to a public loss of confidence in the integrity of the financial market. The ECJ noted that both the financial market and its instruments are becoming increasingly complex, which could lead to difficulties in knowing when information is considered to precise and must thus be made public. Therefore, it is important that issuers thoroughly investigate the nature of the information in advance and that information classed as inside information be made public to the market as soon as possible in order to avoid information asymmetry and potential financial penalties.

For further information on this topic please contact Daniel Astrand at Advokatfirman Törngren Magnell KB by telephone (+46 8 400 283 00) or email ( The Törngren Magnell website can be accessed at

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