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Introduction
The Market Abuse Regulation establishes a regime across the European Union aiming to protect investors by increasing transparency in the financial markets and suppressing market abuse.
The Market Abuse Regulation creates a unified framework for the EU to address market abuse matters, to ensure an effective and coherent informational workflow across the member states, and seeks to increase market integrity and investor protection, enhancing the attractiveness of securities markets.
Context
Market efficiency has major importance for the well-functioning and credibility of markets. For a market to be efficient, all investors should have access to the same information and at the same time, allowing them to make their investment decisions in equal conditions and with trust. Additionally, the public disclosure of information increases Issuers’ visibility and credibility.
Accordingly, MAR determines that the issuers must disclose inside information – information that is precise and material information (i.e., information that may impact the price of listed shares / bonds) related to the issuer or its financial instruments, which has not been made public. It is expected that the disclosure of inside information may impact the price of the listed shares/bonds, following the reaction of the investors. For example, the disclosure of new and positive information on the financial results of the issuer will, presumably, lead to a price increase of the shares (with everything else remaining constant).
Please note that:
The following elements are likely to (depending on the specific case) constitute inside information:
Disclosure obligations
Equity + Debt
Public disclosure of inside information
Obligation
What? Inform the public of inside information (meaning material information) which directly concerns that issuer or its securities.
When? Inside information must be disclosed “as soon as possible”, meaning that the issuer shall not hold inside information, except if the requirements for delay disclosure are met (see exceptions below).
How? CMVM website. Normally, media will further disseminate the information.
Exceptions
In certain cases, the immediate disclosure of certain event may prejudice the interests of the Issuer (example: negotiations to buy a relevant asset or the development of a new product). An issuer may therefore delay disclosure to the public of inside information if all the following conditions are met:
Examples may be found in MAR guidelines (Link).
Insider list
Obligation
Who? Issuers with securities that are admitted to trading on a regulated market or on an MTF and any person acting on their behalf or on their account.
What? Must each:
For further information on the format and content of the insider list check (Link).
Managers’ transactions
Obligation
Who? Persons discharging managerial responsibilities, as well as persons closely associated with them, in companies that have securities issued and trading on a regulated market or MTF.
What? Must notify the Issuer and the CMVM of every transaction conducted relating to the shares or debt instruments of that issuer once the total amount of transactions has reached the threshold of €5,000. The issuer must make public the information contained in this notification.
When? Such notifications to the Issuer and CMVM must be made promptly and no later than 3 business days after the date of the transaction. The issuer must make public the information, through the CMVM’s website, within two business days of receipt.
For further information on the notifiable transactions check (Link), and on format for the notification see (Link).
Persons discharging managerial responsibilities
A person discharging managerial responsibilities is:
(a) a member of the administrative, management or supervisory body of that entity; or
(b) a senior executive, who has regular access to inside information relating to that entity and power to take managerial decisions affecting the entity.
List of managers and notification of their duties
Issuers must (i) notify the persons discharging managerial responsibilities of their obligations in writing; and (ii) prepare a list of all persons discharging managerial responsibilities and persons closely associated with them.
Persons discharging managerial responsibilities must notify the persons closely associated with them of their obligations in writing and must keep a copy of such notification.
Both Issuers and managers must retain a copy of the two previous notifications for a 5-year period.
Exceptions
Equity + Debt
Stabilisation Measures
Requirements for the exception to be applicable
The prohibitions of insider dealing and of unlawful disclosure of inside information do not apply to trading in securities or associated instruments for the stabilisation of securities
For further information on the technical standards check (Link).
Obligations
The details of all stabilisation transactions must be notified to the competent authority of the trading venue (Euronext) no later than the end of the 7th daily market session following the date of the execution of such transactions.
Market soundings
Definition
A market sounding comprises the communication of information, prior to the announcement of a transaction, in order to gauge the interest of potential investors in a possible transaction (e.g. in the context of an IPO).
The disclosure of inside information made in the course of a market sounding does not constitute unlawful disclosure of inside information if MAR requisites are met.
Obligations
A disclosing market participant (i.e. the entity that discloses information in the course of a market sounding) must, prior to conducting a market sounding, consider whether the market sounding will involve the disclosure of inside information. It must also make a written record of (i) its conclusion and the reasons to conclude if the information is inside information or not; (ii) all information given through the course of the market sounding.
For further information on the procedures for disclosing market participants conducting market soundings check (Link) and for the systems and notification templates to be used by disclosing market participants check (Link).
Exception
In the case of an offer of bonds being addressed solely to qualified investors, the communication of information to them for the purposes of the issuance of these bonds does not constitute a market sounding.
Equity (buy-back programmes)
Requirements for the exception to be applicable
The prohibitions of insider dealing and of unlawful disclosure of inside information do not apply to trading in own shares in buy-back programmes where certain requirements referred to in MAR are met.
Please refer to the regulatory technical standards (Link).
Obligations
To benefit from the exemption provided, the Issuer must report to CMVM and disclose to the market, within 7 market session days, information regarding the transactions relating to the buy-back programme.
Equity (liquidity contracts)
Requirements for the exception to be applicable
The prohibition on market manipulation will not apply to transactions related to liquidity contracts which conform to accepted market practices (“AMP”) provided by CMVM. A liquidity contract consists in an issuer entering into an agreement with a financial intermediary that is entrusted with the task of enhancing the liquidity of the issuer’s shares. The liquidity contract may improve the regularity of the trading by the increasing in the traded volumes, the increasing of the number of trades, the decrease of the observed bid-offer spreads or the decrease of the daily price volatility.
Obligations
The issuers must:
All the disclosures must be made through the CMVM’s website and on the issuer’s website. For further information see Link.
