Members of GESSEL’s capital markets practice have contributed to consultations organised by the European Securities and Markets Authority (ESMA) with respect to review of the Market Abuse Regulation (EU) No. 596/2014 of the European Parliament and of the Council of 16 April 2014, which institutes an EU-wide regulatory framework for publicly listed companies geared at ensuring protection of investors.

In our responses to the open consultation questionnaire published by ESMA, GESSEL discussed solutions which, in our belief, may render the MAR more effective in practice by scaling back the regulatory red tape faced by issuers without compromising the safety of other market participants, including:

  1. Delay of inside information

The law as it now is recognises safeguarding information confidentiality as the sole means of fulfilling one of the prerequisites for delaying disclosure of inside information in accordance with art. 17.4 of MAR. Such a strict approach translates into a significant impediment for issuers, particularly in the context of ongoing negotiations and execution of non-disclosure agreements. We expressed ourselves in favour of modifying art. 17.4 of MAR so as to also encompass a situation where the issuer or other market participants have justified grounds for believing that they are ensuring confidentiality of the delayed information.   

  1. The list of insiders

We are in favour of certain adjustments to the provisions regarding maintenance of the list of persons with access to inside information:

  • Issuers should not be liable for incorrect or incomplete information on the insiders list as long as this information is exactly as provided by the given insider;
  • Change – from written to electronic – of the format for confirming receipt of information about the duties arising from inclusion on the insiders list;
  • Issuers should not be held liable for failure to secure the above confirmation and the data necessary for entry on the list provided that they have requested same on two separate occasions.
  1. Transaction reporting thresholds for persons holding managerial duties

Our experience suggests that there is a disproportion in publication of statements announcing transactions by individuals working in managerial capacities and close affiliates vis a vis current statements concerning confidential information. Accordingly, we argue in favour of adjustments to the reporting requirements. As the law now is, the reporting duty applies to every consecutive transaction upon attainment of the aggregate value of EUR 5,000 within a single calendar year. Our proposal would be that this duty apply not to every consecutive transaction past the EUR 5 k mark, but that it kicks in once such consecutive transactions total (another) EUR 5,000 – with respect to the transaction which takes the total past the threshold.

  1. Permission of the issuer for a transaction by a person holding managerial duties within the locked period

In our opinion, transactions effectuated during the locked period by individuals holding managerial duties should not be predicated upon permission of the issuer. Expression of such permission by the issuer has the effect of shifting liability for any violation of the MAR onto the company – such liability ought to remain with the individual benefiting from the transaction in question.