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MAR: Preliminary Results & Closed Periods

2nd June 2016

Market Abuse Regulation: Preliminary Results & MAR Closed Periods

Last week the FCA published a new page on its website setting out its approach to preliminary results and closed periods under the new Market Abuse Regulation (MAR) that will take effect on 3rd July 2016.

As a reminder, the new market abuse regime will apply from 3rd July 2016 to any financial instruments as specified in MAR including those:

• traded on organised trading facilities (OTFs)
• admitted to trading on regulated markets and multilateral trading facilities (MTFs)

In addition it will apply to transactions or behaviour on emission allowance auction platforms.

It should be noted that MAR’s scope of application is defined largely by reference to the Markets in Financial Instruments Directive (MiFID) and the revised directive -  MiFID II – that is now scheduled to become effective on 3 January 2018.

What is a closed period under MAR?

Whilst the term ‘close period’ is used in the existing regime, under MAR the term ‘close period’ will be used to specify the period  of time before a regular results announcement, during which the directors of an issuer are not allowed to deal in its shares and other quoted securities.

The length of the ‘closed period’ under MAR will be for 30 days.

In addition during a ‘closed period’ under MAR, (except in specified circumstances), there will be a prohibition on dealing in the shares and debt instruments of the issuer (or linked financial instruments) by persons discharging managerial responsibilities (PDMRs).

Preliminary Results

In the UK, issuers often announce preliminary results some days or weeks ahead of when the final year-end results are published.

Under the current regime in the UK, the public announcement of preliminary results ends the relevant ‘close period’ and thus the prohibition on dealing also ceases at that time.

The FCA has informed that there is some confusion within the industry about when issuers who make preliminary announcements need to impose closed periods - whether this should be before the preliminary results, the year-end report or both.

However since the interpretation between MAR closed periods and preliminary periods is a topic still under discussion in Europe, the regulator is unable at this time to provide any additional clarification.

In the meantime, and until such time that ESMA and the European Commission provide additional guidance on this matter, the FCA has informed that they will continue to take the stance that where an issuer announces preliminary results, the closed period (during which dealing is prohibited), is immediately before the preliminary results are announced.

Furthermore, this only applies where the preliminary announcement contains all inside information expected to be included within the year-end report.

MAR Support Services:

If you would like to discuss how the new Market Abuse Regulation may affect your business and what you may need to do to finalise your MAR preparations, please contact our regulatory and compliance specialists who would be happy to help.

Read our latest articles, news and views affecting compliance and regulation in the UK Financial Services Industry.