Efficient markets: Towards the Holy Grail

ASX is investigating trading in OneTel shares before a trading halt was announced on Monday as revealed in today's Australian Financial Review. Similarly, Qantas shares jumped about a month ago before trading was halted due to the merger announcement with Impulse Airlines. It appears a privileged few may be benefiting from access to price sensitive information before it becomes widely available, not that this is anything new. Is it simply a case of bringing forward the decision to halt the trading in a company's shares pending a price sensitive announcement ?

The leaks occur between the time that the decision making process begins and when a formal announcement is made to the market. Perhaps if trading halts were instigated earlier in the process these occurrences could be thwarted, but is this the answer ? Current measures to foster an informed market comprise ASX announcements, trading halts, insider trading laws, distribution of announcements over the internet and the opening up of analyst briefings to a broader audience.

While we have advanced along the path towards an efficient market, recent experience with Qantas and OneTel have shown we still have a way to go.