European Union: ESMA: Updated Q&A On MAR

On 1 September 2017 and 29 September 2017, respectively, ESMA published further updates to its Q&A on MAR. We discussed this in the Q2 2017 edition of Governance & Securities Law Focus. Changes since the last version include:

  • A new question relating to market sounding (Q9): this asks whether communications of information to potential investors, made prior to the announcement of a transaction in order to gauge interest in a possible transaction are caught by Article 11 of MAR. ESMA's response distinguishes between situations where the financial instrument which is the subject of the possible transaction is:
    • already admitted to trading, is traded on a trading venue or a request for admission to trading has been made (when the transaction would fall within the scope of Article 11); and
    • not admitted to trading, not traded on a trading venue and no request for admission to trading has been made (when the instrument would not fall within Article 2(1)(a)-(c)).
  • ESMA notes that an instrument could still be caught, by virtue of Article 2(1)(d) of MAR, if its price or value depended on, or had an effect on, the price or value of another instrument that was in scope of MAR. Disclosers must assess on a case-by-case basis whether there is any relationship between the price or value of the financial instrument which is the subject of the market sounding and any other instrument falling within the scope of MAR. Disclosers will be expected to document their assessment;
  • Two questions relating to insider lists (Q10.1 and Q10.2): Q10.1 considers whether persons acting on behalf of or on account of an issuer, such as advisers and consultants, are subject to the obligation to draw up, update and provide, upon request, their own insider lists under Article 18(1) of MAR. Q10.2 discusses the circumstances in which an issuer remains responsible for compliance;
  • A new answer to existing Q6.1 to clarify the scope of Article 16 MAR. ESMA states that non-financial firms trading in financial instruments as part of their business activities can be considered firms professionally arranging or executing transactions in financial instruments under Article 16(2) of MAR;
  • A new question relating to disclosure of inside information (Q5.2): this asks what an issuer should do if disclosure of inside information has been delayed and then that information ceases to be inside information before the delayed disclosure is released.

ESMA says that, where the issuer has delayed the disclosure of inside information in accordance with Article 17.4 of MAR, and the information subsequently loses the element of price sensitivity, Article 17.1 of MAR can no longer apply, so the "stale" inside information does not have to be announced.

However, given that the information has previously been inside information for a certain period of time, the issuer has to comply with the other MAR obligations that applied to the information while it qualified as inside information, such as entries on insider lists and the record- keeping required while the inside information was being delayed.

The full text of the updated Q&A is available at:

https://www.esma.europa.eu/sites/default/files/library/esma70-145-111_qa_on_mar.pdf

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