Strengthening Regulatory Strategies Against Insider Trading in Tanzania Securities Markets: Evidence from Legal and Empirical Documents

Abstract

This paper examines regulatory measures aimed at enhancing the Tanzania’s legal framework in combating insider trading within securities markets. It identifies substantive and procedural deficiencies in the Capital Markets and Securities Act (CMSA) that undermine market integrity and investor protection. Employing a doctrinal legal methodology, complemented by empirical legal inquiry, the study analyses statutory provisions, jurisprudence, regulatory practices, and stakeholder perspectives to evaluate the adequacy of existing legal and institutional mechanisms for the purpose of proposing legal reforms for enhancing it. The study reveals significant shortcomings, including the absence of clear statutory definitions for critical terms such as “insider,” “insider trading,” and “non-public material information,” as well as the failure to designate insider trading as an independent criminal offence. These gaps generate legal uncertainty and impede enforcement. Further constraints arise from limited regulatory capacity, lack of advanced surveillance tools, and the concentration of investigative and adjudicative powers within a single regulatory entity. Guided by international best practices, particularly the standards of the International Organization of Securities Commissions (IOSCO), the study proposes comprehensive reforms to the CMSA. Key recommendations include codifying clear definitions, criminalizing insider trading and related conduct tipping, enhancing regulatory enforcement powers, and investing in real-time surveillance infrastructure. Institutional reforms are proposed to ensure functional separation of investigatory and adjudicative roles, thereby promoting regulatory independence and procedural fairness. Additionally, the study advocates for the establishment of investor protection mechanisms, legal reforms addressing emerging financial instruments (including digital assets), and harmonization of domestic law with regional and international frameworks to ensure legal coherence, investor confidence, and market stability.