How is market abuse defined according to the Code of Market Conduct?

Prepare for the ACA ICAEW Tax Compliance Exam. Study with flashcards and multiple choice questions, each question has hints and explanations. Get ready for your exam!

The definition of market abuse, as outlined by the Code of Market Conduct, encompasses behavior that relates to qualifying investments on a prescribed market. This includes conduct that misleads or distorts the market's integrity, such as insider trading or manipulative practices. Such behaviors undermine the confidence of investors and the proper functioning of markets.

By focusing on qualifying investments and the specific market context, the definition captures a range of activities that could be deemed abusive, which are critical for maintaining fair trading practices. This is particularly important because it sets regulatory guidelines that protect investors and the overall economic environment from malpractice.

Other options provided in the question do not accurately reflect the precise definition of market abuse as per the Code. While unethical trading may be a component of market abuse, it does not encompass the full legal and regulatory framework. Antitrust lawsuits pertain to competition law and government restrictions on trading do not specifically define market abuse but rather relate to market regulations.

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