LEGAL COUNTERMEASURE FOR THE INEVITABILITY OF INFORMATION ASSYMETRY IN CURRENT CAPITAL MARKETS

"ALL THE LIGHT YOU SEE FROM THE PAST." It is a phrase of a sign installed in several places around the world, including the waterfront in Georgetown, Washington, D.C., United States. This means that by the time it reaches people's eyes, everything they are seeing is technically already in the past. From the perspective of life or art, the phrase is indeed a beautiful and profound expression, but if you put it into the capital market, it illustrates that "the capital markets are not fair." This is because, in current capital markets, there is information asymmetry between fast traders and slow traders, and ordinary investors are always exposed to adverse selection when new information flows into the markets. Unfortunately, when fair disclosure was introduced, several facts, such as different trading conditions between investors the discrepancy "timing" of accessing the information, the different "speeds" of a network, and the varying "distances" to information sources or order book (server), couldn't be considered due to the social and market environment. Accordingly, instead of enforcing issued corporations to disclose material nonpublic information to all investors simultaneously, the securities regulation system must allow a chance to avoid information asymmetry by allowing corporations to sell their information in advance of fair disclosure. However, this work is not easy because the fair disclosure system and insider trading regulation require simultaneous dissemination of information, and this principle is treated as a "Sacred Tenet." Therefore, to level the playing field in a substantive meaning, not only those factors must be considered, but also a plan for harmonizing the current legal systems and new legal systems for protecting ordinary investors would necessarily be prepared. From this background, the author introduces factors generating information asymmetry, discusses the necessity of a new legal system, and, based on a new insider trading theory "Discretion of Corporation Theory," examines a plan for rebuilding rules treating information asymmetry to level the playing field in substantive meaning.