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FCA Consult upon Delay in Disclosure of Information

29th November 2016

MAR Consultation: Delay in Disclosure of Information

The new Market Abuse Regulations mandated ESMA to issue Guidelines regarding its application. ESMA have now issued official translations of two sets of guidelines during October and November 2016. Following the issuance of ESMA’s guidelines the FCA have this week entered into a consultation on the delay in disclosure of inside information.

 CP16/38: Proposed changes to DTR 2.5 on delay in disclosure of inside information

Consultation paper CP16/38 is an open consultation and relates to the proposed amendments to the regulator’s Handbook to ensure that the FCA complies with ESMA’s Guidelines.

Since the new Market Abuse Regulations (MAR) took effect across the EU on 3rd July 2016, inside information has been required to be announced as soon as possible with delays permitted only when specific conditions are met.

The regulator has now considered the provisions within their FCA Handbook relating to the delay in disclosure of inside information and has determined that changes to section DTR 2.5 will be needed to make it comply with ESMA’s Guidelines on this subject.

Summary of MAR:

As mentioned, the Market Abuse Regulation (MAR) has been in place across Europe since 3 July 2016 with the aim of updating and strengthening the existing EU market abuse framework. MAR repealed and replaced the Market Abuse Directive (MAD) that had been in place and has now extended the scope of the regime to cover new instruments, platforms and has extended manipulation offences to include attempted manipulation and the manipulation of benchmarks.

The new MAR also includes a new regime for market soundings and certain disclosure obligations, including those on issuers relating to inside information.

ESMA Guidelines on MAR:

The European Securities and Markets Authority (ESMA) have now published their official translations of two sets of Guidelines that cover:

• Delay in the disclosure of inside information (published 20 October 2016); and
• Market soundings (published 10 November 2016).

A third and final set of guidelines is expected to cover information relating to commodity derivatives markets or related spot markets for the purpose of the definition of inside information on commodity derivatives.

It is the FCA’s intention to comply with both sets of ESMA Guidelines, thus the regulator’s review of the FCA Handbook to ensure it is consistent.

The FCA have determined that there is no need for any changes to be made to the Handbook in relation to Market Soundings, however there will need to be changes made to the section covering the delay in disclosure of inside information.

Next Steps:

This consultation paper will be of particular interest to issuers of instruments in the scope of the new Market Abuse Regulation (MAR) as well as those firms who advise those issuers.

It may also be of interest to those market participants who directly or indirectly deal or invest in any of the financial instruments that fall within MAR’s scope.

All comments on the proposed changes to the FCA’s handbook should be sent to the FCA before the deadline of 6th January 2017 whereupon the regulator will then consider any feedback they have received before publishing their final guidance in a Policy Statement expected within the first quarter of next year.

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