On April 28, 2016 the Financial Conduct Authority (FCA) published Policy Statement 16/13 on the implementation of the Market Abuse Regulation (MAR). In this policy statement the FCA summarises the feedback received on the FCA’s consultation on policy proposals and Handbook changes related to the implementation of MAR in CP15/35, published in November 2015, and its consultation on provisions to delay disclosure of inside information within the Disclosure and Transparency Rules (DTRs) in CP15/38, published in November 2015. The FCA has incorporated this feedback into the changes to the FCA Handbook, which are set out in Appendix 1.
Summary of feedback
In its summary of feedback received, the FCA notes the following:
- Most respondents supported the Treasury and the FCA’s proposals that issuers should provide a written explanation following notification of delayed disclosure of inside information only upon being requested to do so by the FCA. The FCA anticipates that the Statutory Instrument to be made by the Treasury will include this approach.
- Most respondents supported the proposal that the threshold above which dealings by persons discharging managerial responsibilities (PDMRs) and persons closely associated with them in financial instruments of the issuer should be notified should be €5000. This is the threshold the FCA will implement. However, the FCA notes that all transactions can be disclosed on a voluntary basis, regardless of the €5000 threshold if issuers wish. It also notes that requests were made for further guidance on how currency conversions from Euros to local currencies would work under the proposed threshold and states that ESMA is currently considering this issue.
- Regarding the delay in disclosing inside information in DTR 2 and the FCA’s proposed changes, the FCA notes the comments made by several respondents on the ESMA Guidelines under Article 17(11) EU MAR but because they have not yet been finalised, the FCA is maintaining the elements outlined in CP15/35. The FCA will reassess the status and continuance of DTR 2.5 in due course once it has more certainty on the content of the ESMA Guidelines. This also applies with respect to DTR 2.5.5G. In light of the requests for further guidance from respondents to CP15/38 and the probability that this provision will need to be amended once the ESMA Guidelines are available, for the time being, the FCA will maintain this provision in its current form, rather than deleting the final sentence as suggested in CP15/38.
- The FCA notes with regard to the proposed changes to Chapter 9 of the Listing Rules (LR) and Annex 1, that, as outlined in CP15/35, there is a clear overlap between the Model Code and MAR, making the Model Code’s retention in its current form incompatible with the UK’s European legal obligations. However, the FCA has concluded that going ahead with its proposal for replacement rules and guidance would be unnecessarily onerous on issuers and PDMRs alike and would not provide the legal certainty needed by stakeholders. As a consequence the FCA is deleting the Model Code (i.e. Annex 1 of LR 9) as proposed but will not introduce the proposed new rules (LR 6.1.29R and LR 9.2.8R) relating to the requirement for issuers to have effective systems and controls in place regarding the process for PDMRs to obtain clearance to deal, and the associated guidance. The FCA notes the suggestion of an industry-led development of codes or best practice in this area and would support such a development.
In Chapter 4 of PS16/13, the FCA summarises other issues raised by respondents and identifies some of the areas raised in responses which were not part of the original proposals in its consultations, including questions in relation to DTRs 2, 2.8 and 3 (Articles 17, 18 and 19 MAR). The FCA is considering the appropriate approach for each of these areas. If the FCA considers it would be appropriate to address any of the matters with further guidance, it will endeavour to bring this forward, via either European level or domestic guidance. If the FCA decides that guidance is appropriate, it may consult on these issues in the future.
The revised provisions and guidance to the Handbook set out in Appendix 1 to PS16/13 will come into force on July 3, 2016 at the same time as MAR. However, at the time of publication of the Policy Statement, it is still unclear when all the final Level 2 texts of MAR will be published in the Official Journal of the European Union. The European Commission has endorsed several of the technical standards but they still need to be notified by the EU Council and European Parliament before they can be published in the Official Journal and confirmed final. The FCA anticipates that it will add further sign posts in the Handbook to provisions of implementing measures made under MAR at a later stage. These cannot be added yet because the implementing measures have not yet been published in the Official Journal and therefore the FCA does not yet have the specific reference numbers and dates for complete and accurate cross-references. Furthermore, the three sets of ESMA has been mandated to draft under Articles 7(5), 11(11) and 17(11) of MAR have not yet been finalised. Therefore the FCA may have to reassess some of the provisions in the Handbook depending on the outcome of these Guidelines.
(FCA, Policy Statement PS16/13: Implementation of the Market Abuse Regulation (2014/596/EU), including feedback on CP15/35 and CP15/38, and related amendments to the Handbook, 28.04.16)