ESMA Guidelines and Recommendations

ESMA readies MAR guidelines on market soundings and delayed disclosure of inside information

ESMA Guidelines and Recommendations

Date: 12 September 2016

On 13 July 2016, the European Securities and Markets Authority (ESMA) issued final guidelines clarifying the implementation of the Market Abuse Regulation (MAR) for persons receiving market soundings and on delayed disclosure of inside information.

The new market abuse regime strengthens the existing market abuse framework by extending its scope to new markets, platforms and trading behaviours. It contains prohibitions for insider dealing and market manipulation, and provisions to prevent and detect these. 

“Market sounding” are 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. ESMA’s final guidelines detail:

  • 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 if inside information has been disclosed to them; and
  • the records that such persons are to maintain in order to demonstrate that they have complied with MAR.

On legitimate interests of issuers to delay disclosure of inside information and on situations in which the delay of disclosure is likely to mislead the public, ESMA’s guidelines provide 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.

Within two months of the issuance of the different language versions of these guidelines, national competent authority (NCA) will have to confirm whether or not they intend to comply with those Guidelines. In the event that a NCA does not comply or does not intend to comply, it will have to inform ESMA, stating its reasons.