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Introduction
The Market Abuse Regulation establishes a regime across the entire European Union aimed at protecting investors, increasing transparency in financial markets, and sanctioning practices considered abusive.*
*Regulation (EU) No 596/2014 of the European Parliament and of the Council of 16 April 2014 on 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
For issuers of SHARES or 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:
In processes that are continued over time, companies will only have to disclose as inside information the ‘final circumstances or events’, and must do so as quickly as possible, provided that the confidentiality of the information is ensured throughout the process.
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:
These requirements are simplified for issuers with financial instruments admitted to an EU Growth market.
For more information on the format and content of the inside information list, see Commission Delegated Regulation (EU) 2016/1210 of 17 December 2015.
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 €20,000. 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.
Further information on notifiable transactions in Commission Delegated Regulation (EU) 2016/522 of 17 December 2015, and on the format of the notification in Commission Delegated Regulation (EU) 2016/523 of 17 December 2015.
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.
Prohibition of Market Abuse
The Market Abuse Regulation prohibits three main forms of market abuse:
1 – Insider dealing
When a person uses inside information to acquire or dispose of financial instruments to which that information relates.
When a person holds inside information and recommends that another person acquire or dispose of financial instruments related to that information.
2 – Unlawful disclosure of inside information
When a person is in possession of inside information and discloses that information to any other person, except where such disclosure occurs in the normal exercise of their business, profession, or duties.
3 –Market manipulation
Deceiving the market through a particular activity or activities that manipulate the price. This comprises the following activities:
For further indicators of manipulative behaviour, see Commission Delegated Regulation (EU) 2016/522 of 17 December 2015.
Prohibitions
Prohibition of insider dealing and of unlawful disclosure of inside information
The following is prohibited:
Prohibition of market manipulation
Market manipulation, or the attempt to manipulate the market, is prohibited.
Exemptions to the market abuse prohibition rules
For issuers of SHARES or 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, see Commission Delegated Regulation (EU) 2016/1052.
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.
Liquidity agreements
Requirements for the exception to apply
The prohibition of market manipulation does not apply to liquidity contracts that comply with the accepted market practices (‘AMP’) established by CMVM. A liquidity contract consists of entering into an agreement with a financial intermediary entrusted with the task of enhancing the liquidity of the issuer’s securities. The liquidity contract is capable of increasing the volume traded and the number of transactions, as well as reducing the spreads between supply and demand and the daily volatility of prices.
Duties
Issuers must:
Todas as divulgações devem ser feitas através do website da CMVM e no website do emitente. Para mais informações, ver Regulamento Delegado (UE) 2016/908.
Market soundings
Definition
A market sounding involves the communication of information, prior to the announcement of a transaction (if any), in order to gauge the interest of potential investors in a possible transaction (for example, in the context of an IPO).
Market participants must comply with the MAR requirements relating to market soundings. Some of these requirements are optional in nature, allowing market participants to benefit from protection against any allegation of unlawful disclosure of inside information.
Obligations
A market participant who discloses information, before conducting a market sounding, must consider whether the market sounding will involve the disclosure of inside information. The disclosing market participant must make a written record (i) of its conclusion as to whether or not the information constitutes inside information, and the respective reasons; and/or (ii) of all information disclosed in the course of the market sounding. In order to benefit from the regime, the market participant must obtain the consent of the recipient and inform them of the prohibition on the use of the inside information.
For further information on the procedures applicable to market soundings, see Commission Delegated Regulation (EU) 2016/960 of 17 May 2016, and for the templates for notification and record-keeping to be used by disclosing market participants, see Commission Implementing Regulation (EU) 2016/959 of 17 May 2016.
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.
For issuers of SHARES
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 carried out under ‘buy-back’ programmes that comply with the rules laid down in the MAR.
You can find further details on these rules here — Commission Delegated Regulation (EU) 2016/1052.
Obligations
In order to benefit from the exemption provided for, the Issuer must notify CMVM (or the competent authority of the most relevant market in terms of liquidity) and disclose to the market, within 7 trading days, information relating to the transactions connected with the ‘buy-back’ programme, on an aggregated basis.
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.
