>prevent trading based on non public information
You completely misunderstand what inside trading means. Inside trading prevents company insiders from trading with the company they work for. Insider trading laws are there to protect shareholders.
It's completely fine to use non public information about world events to trade.
Are we talking about unauthorised access of information or something else?
How people voted is not insider information.
I don't believe it is legal for outsiders to make trades based on non-public information they have acquired from company insiders. For example, if I am the CFO of a publicly traded company, I cannot come to you and whisper in your ear that we just got hit with a massive data breach, because doing so would give you the opportunity to dump your stocks based on that non-public information.
In the US insider trading laws are geared around protecting shareholders from insiders. Solving for the agency problem. In that case an outsider who finds non-public data and trades on it is likely (though the complexity of this is one of the downsides of the regine) not insider trading.
In many European regimes the goal is information parity. In that case outsiders can generate material non-public data, and thus illegally trade on it.
As someone who spent a lot of time under the US regime the European model blows my mind, but in objective terms there isn’t anything bizarre about it.
It does seem (more than) a little bizarre to me.
If I understand your post correctly, in Europe, I could do traffic counts at malls, conclude (correctly) something about a company's sales from that, trade profitably based on that conclusion, and be prosecuted successfully for it?
If that's the case, how should I create my own opinion about the state of a company in order to decide how much to bid (or ask) for the shares of that company? Am I just supposed to blindly make investments since any amount of private research is bound to be deemed illegal? It seems that the entire purpose of research is to generate an informed opinion which differs from the current public opinion.
We've found hedge funds placing orders with the presumed intention of deriving order volume information from sequential IDs that we inadvertently leaked in the shipping process (since fixed). My view is "good on them for thinking of it!" Is trading based on that illegal as well?
As for where the lines are drawn I’d guess there is a whole industry around determining that just like in the States.
It’s definately not ok to trade based on insider information. Doesn’t matter if you just heard from you cousin who’s the CEO of a company that they are about to tank or reach for the moon. You might not work for the company but you are still guilty of trading on non-public insider information.
Polls are information about the environment where companies operate, not non-public fact regarding the plans or condition of a publicly traded company.