This blog post originally appeared on AsiaEtrading.

Trading in Hong Kong remains a challenging endeavor for global investors. As authorities work to eradicate insider trading, Hong Kong has served as an informal test case for exploring how far the free market ethos can go before it begins to scare off investors.

Hong Kong embodies an irony about capital markets—they have to be free to attract investors but rampant abuse of that freedom will drive investors away. In this case, unrestricted insider trading was threatening the integrity of Hong Kong’s markets.

The negative publicity about a culture of insider trading, that only recently was made illegal, led to a crisis of confidence. Things were so bad that insider trading was seen as almost a privilege. Market participants and the regulators knew they had to do something. Thus the regulators had to serve as the catalysts for a fundamental shift in the trading culture. And, so far, it appears to be working.

Over the past four years…