The European Securities and Markets Authority (ESMA) has published a consultation paper concerning draft guidelines on the Market Abuse Regulation (MAR).
Market soundings
Section 2 of the consultation paper contains the draft guidelines for persons receiving market soundings.
Article 11(1) MAR provides that a “market sounding” is a communication of information, prior to the announcement of a transaction, in order to gauge the interest of potential investors in a possible transaction and the conditions relating to it such as its potential size or pricing, to one or more potential investors. Recitals 32 and 33 MAR provide further descriptions. Article 11(4) MAR then provides that when a disclosing market participant (DMP) discloses inside information to a person in the course of a market sounding (MSR) in accordance with the conditions set out in Article 11(3) and (5), this should be deemed to have been made in the normal course of the exercise of a person’s employment, profession or duty, and therefore not to constitute market abuse.
On 28 September 2015, ESMA submitted to the European Commission draft regulatory and implementing technical standards to determine appropriate arrangements, procedures and record keeping requirements and to specify the systems and notification templates to be used by DMPs when conducting market soundings.
Article 11(11) MAR also requires ESMA to issue guidelines, addressed to the MSR, regarding:
- the factors that such persons are to take into account when information is disclosed to them as part of a market sounding in order for them to assess whether the information amounts to inside information;
- the steps that such persons are to take into account when information is disclosed to them in order to comply with Articles 8 and 10 MAR; and
- the records that such persons are to maintain in order to demonstrate that they have complied with Articles 8 and 10 MAR.
The draft guidelines are aimed at meeting the mandate that ESMA has been given under Article 11(11) MAR.
Legitimate interests and omissions likely to mislead the public
Section 3 of the consultation paper contains the draft guidelines on legitimate interests and omissions likely to mislead the public.
Article 17(1) MAR provides that issuers should inform the public as soon as possible of inside information that directly concern them. Article 17(2) contains a similar provision with reference to emission allowance market participants. Article 17(4) MAR specifies that issuers and emission allowance market participants may, on their own responsibility, delay disclosure to the public of inside information provided that each of the following conditions are met:
- immediate disclosure is likely to prejudice the legitimate interests of the issuer or emission allowance market participant;
- delay of disclosure is not likely to mislead the public; and
- the issuer or emission allowance market participant is able to ensure the confidentiality of that information.
Pursuant to Article 17(11) MAR, ESMA is required to issue guidelines to establish a non-exhaustive and indicative list of:
- legitimate interests of the issuer that are likely to be prejudiced by immediate disclosure of inside information; and
- situations in which delay of disclosure is likely to mislead the public.
The draft guidelines are aimed at meeting the mandate that ESMA has under Article 17(11) MAR.
Next steps
The deadline for comments on the consultation paper is 31 March 2016.
ESMA will consider the feedback it receives to the consultation with a view to finalising the two sets of draft guidelines and expects to publish a final report by early Q3 2016, around the entry into application of MAR.
View ESMA consults on MAR guidelines regarding market soundings and delayed disclosure of inside information, 28 January 2016
