On 30 September 2016, the European Securities and Markets Authority (ESMA) issued final guidelines clarifying one element of the definition of inside information in relation to commodity derivatives under the Market Abuse Regulation (MAR). The new market abuse regime strengthens the existing market abuse framework. In particular, with regards to commodity derivatives, MAR is further specifying the definition of inside information as information that:

• relates directly or indirectly to such commodity derivatives or directly to the related spot commodity contract;
• meets the three conditions of the general definition of inside information in relation to financial instruments (namely being non-public, precise and price sensitive); and
• is reasonably expected or required to be disclosed in accordance with legal or regulatory provisions at Union or national level, market rules, contract, practice or custom, on the relevant commodity derivatives markets or spot markets.

The mandate under MAR requires ESMA to issue guidelines on the last element of that definition on establishing a non-exhaustive indicative list of information which is reasonably expected or required to be disclosed in accordance with legal or regulatory provisions in Union or national law, market rules, contract, practice or custom, on the relevant commodity derivatives markets or spot markets. ESMA expects market participants, investors and regulators to take into account the list of examples provided in these guidelines for the assessment of whether information is inside information, noting though that the assessment should also be conducted against the other conditions of the definition not covered by these guidelines. These guidelines do not impose any additional information disclosure requirements, as the concept of “required to be disclosed” refers to existing or future disclosure requirements (for instance, under national law), independently of these guidelines.

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 them. In the event that a NCA does not comply or does not intend to comply, it will have to inform ESMA, stating its reasons.

For more information on Market Abuse Regulation click here.