New market abuse rules enter into force

The Market Abuse Regulation (Regulation (EU) No 596/2014) (MAR) came into force on July 3, 2016. MAR applies to securities traded on regulated markets and to those traded on multilateral trading facilities or organised trading facilities in a Member State. MAR also applies to financial instruments where the price or value depends on or affects the price or value of such securities.

The usual prohibitions against insider trading, market manipulation and market abuse continue to apply. The summary below sets out the key changes affecting debt securities listed and admitted to trading in an EU Member State.

Inside Information

Website publication

Issuers are required to post and maintain on its website for a period of at least 5 years, all inside information it is required to disclose publicly.

Delayed disclosure
If the issuer has chosen to delay disclosure of inside information (only permitted subject to certain conditions as set out in Article 17(5)), it will be required to notify the competent authority (in the UK, being the FCA) immediately after announcement of such inside information and must include in that notification details of such inside information together with the identity of all persons responsible for the delay decision.

The template for notification of delayed disclosure of inside information can be found here.

Insider Lists
An insider list must be provided to the competent authority upon request and must be maintained for five years after they were prepared or last updated.

For a template Insider List, see Annex I.

Issuers will need to take all reasonable steps to ensure that any person on the insider list acknowledges in writing the legal and regulatory duties entailed and is aware of the sanctions applicable to insider dealing and unlawful disclosure of inside information.

Notification of Dealings by PDMRs

Persons discharging managerial responsibilities (PDMRs) and “persons closely associated” with them must notify the issuer and the competent authority of transactions relating to listed securities of the issuer promptly and in any case, no later than three business days after the date of the transaction. “Persons closely associated” means:

1. a spouse, or a partner considered to be equivalent to a spouse in accordance with national law;
2. a dependent child, in accordance with national law;
3. a relative who has shared the same household for at least one year on the date of the transaction concerned; or
4. a legal person, trust or partnership, the managerial responsibility of which are discharged by a PDMR or by a person referred to in (a), (b) or (c) above, which is directly or indirectly controlled by such a person, which is set up for the benefit of such a person, or the economic interests of which are substantially equivalent to those of such a person.

The issuer must make such information notified to it public, promptly and in any case no later than three business days after the transaction. It should also be noted that PDMRs transactions must have reached a cumulative amount of €5,000 in a calendar year (excluding netting) before disclosure is required.

The template for PDMR notification can be found here.

Restriction on Dealing during Closed Periods

PDMRs must not deal with the issuer’s listed securities (on its own account or for a third party, directly or indirectly) during a closed period of 30 calendar days before the announcement of an interim financial report or a year-end report which the issuer is obliged to make public according to the rules of the trading venue where the issuer’s shares are admitted to trading, or national law.

An issuer may allow a PDMR to trade during a closed period under limited exceptions including, exceptional circumstances such as severe financial difficulty requiring immediate sale.

For a comprehensive summary of how MAR affects UK listed issuers, please see our article here.