On July 13, 2016, the European Securities and Markets Authority (ESMA) published its final report on the Market Abuse Regulation (MAR), setting out guidelines in relation to market soundings and the delay of disclosure of inside information and situations in which the delay of disclosure is likely to mislead the public under Articles 11(11) and 17(11) of MAR (the Guidelines). The Guidelines contain some amendments to those proposed in ESMA’s consultation paper published in January 2016.
With regard to market soundings, the sections on what to do in the case of a discrepancy of opinion have been removed. The reasons for this are related to the fact that further dialogue between the parties could involve the risk of additional information inadvertently being disclosed and the liaison requirement was not strictly included in the mandate.
Other changes relating to market soundings include:
- The Guidelines recognise that the required internal procedures and training within a person receiving a market sounding should be appropriate and proportionate to the scale, size and nature of its business activity.
- In assessing whether or not it is in possession of inside information, the Guidelines expressly state that a person receiving a market sounding should not be required to access information behind any information barrier established by that person.
- The list of staff receiving a market sounding in possession of information communicated in the course of the market sounding is now subject to the record keeping requirements, which require specified records to be kept for at least five years. A person receiving a market sounding must now keep a record of those persons working for them under an employment contract or otherwise performing tasks through which they may have access to the information communicated in the course of market soundings.
Under the Guidelines on legitimate interests of issuers to delay disclosure of inside information, only two conditions have been retained that must be met where inside information relates to a management decision or contract that is subject to approval by another body of the issuer. These are:
- that immediate public disclosure of information before a definitive decision would jeopardise a correct assessment of the information by the public; and
- that the issuer has arranged for the definitive decision to be taken as soon as possible (not on the same day, as previously drafted).
Other issues covered in the Guidelines concerning legitimate interest in delaying the disclosure of inside information are ongoing negotiations and grave and imminent danger to the financial viability of the issuer, development of a product or an invention, a plan to buy or sell a major holding in another entity and deals or transactions previously announced and subject to a public authority’s approval.
Within two months of the Guidelines being issued, each national competent authority will have to confirm whether it complies or intends to comply with the Guidelines. In the event that a national competent authority does not comply or does not intend to comply, it will have to inform ESMA, stating its reasons.
(ESMA, Guidelines on the Market Abuse Regulation - market soundings and delay of disclosure of inside information (ESMA/2016/1130), 13.07.16)