How Do Regulatory Bodies Attempt to Mitigate Information Asymmetry in Traditional Markets?

Regulatory bodies mitigate information asymmetry in traditional markets through strict rules and enforcement. They mandate public disclosure of material information (Regulation FD), prohibit insider trading, and require exchanges to maintain fair and transparent order execution rules.

Surveillance systems actively monitor for manipulative trading practices like front-running. The goal is to ensure all market participants have equal access to the same information at the same time.