Former Macquarie banker and insider trader Oswyn de Silva has been sentenced to two-and-a-half years' jail over a series of offshore stock market trades that saw him net $1.4 million in four months.

In the NSW Supreme Court this morning, Justice Terence Buddin said de Silva's case was of a true insider, rather than someone who just traded on the market using inside information.

"Such a person is placed in a position of trust with greater access to inside information than would otherwise be the case. There exists a consequent greater capacity to damage the securities market and the confidence of those who invest in it," he said.

Justice Buddin said after 18 months’ jail, de Silva was to be released on a one-year good behaviour bond. Because of circumstances linked to an earlier jail sentence, when de Silva served six months in jail for contempt of court for trying to flee the country, the sentence was backdated to start in January 2011. He will be deported on the expiry of his sentence.

The 37-year-old Malaysian citizen who had worked for Macquarie in Sydney and London, pleaded guilty last September to a form of insider trading known as front-running, where he used his knowledge of upcoming trades in securities and CFDs to trade to his own benefit.

Within four months in 2007 he generated $1.4 million for himself trading through a secret account he held with a Singapore based stockbroking firm. During an earlier court hearing de Silva said he viewed his trading as a "performance fee" for what he regarded were "inhuman hours" for the bank.

Many of the shares he bought were sold back, at an inflated price, to the fund he worked for, Macquarie Investment Management Limited.

The Australian Securities and Investments Commission first learned of the suspected insider trading in June 2008, via the Monetary Authority of of Singapore.

llamont@smh.com.au