Price sensitive information: news that can move a stock

Certain company news can move a share price the moment it becomes public. This is price sensitive information. This guide explains what it is and how companies must handle it.

Quick answer

Price sensitive information, or PSI, is information about a company that could affect its share price if it became public. Examples include results, deals or major changes. Companies must handle price sensitive information carefully, disclosing it to the market fairly and preventing its misuse before it is public.

Key takeaways

• Price sensitive information can move a share price.
• Examples include results, deals and major changes.
• It must be disclosed to the market fairly.
• Its misuse before disclosure is insider trading.
• Companies must protect it until it is public.

What is price sensitive information?

Price sensitive information, or PSI, is information about a company that could affect its share price if it were made public. It is the kind of news that investors would act on if they knew it.

When such information is still secret, it is often called unpublished price sensitive information. Once it is announced to the market, it becomes public and everyone can act on it.

What counts as price sensitive?

Examples of price sensitive information include financial results, a merger or big deal, a dividend, a major expansion or a significant change in management or business.

What these share is that a reasonable investor would likely act on them. That is what makes the information capable of moving the share price.

How must companies handle it?

Companies must handle price sensitive information carefully. They must disclose it to the market promptly and fairly, so that all investors get it at the same time.

Before disclosure, companies must guard the information and prevent insiders from trading on it, since that would be unfair to others.

Why does it matter?

It matters because fair markets depend on everyone getting important news at the same time. If some people traded on secret price sensitive information, others would be at a disadvantage.

Proper handling of PSI, through fair disclosure and preventing misuse, keeps the market level and trustworthy.

What should investors know?

For investors, the key is that you should trade only on information that is public. Acting on secret price sensitive information can cross into insider trading.

Understanding PSI helps you see why disclosure rules exist. Any investment decision should be your own after proper research using public information.

Frequently Asked Questions