On 28 April 2016, the FCA released its Policy Statement (PS 16/13) on Implementation of the Market Abuse Regulation (2014/596/EU), including feedback on its previous Consultation Papers (CP 15/35 and CP 15/38) and related amendments to the FCA Handbook. Our previous briefing on CP 15/35 can be found here.
Key points
- Areas on which the FCA had discretion under EU MAR (options on how to implement) - the FCA confirms in this policy statement that issuers will only have to provide a written explanation of any delayed disclosure of inside information on request from the FCA - this has not changed from the original proposal.
- Further, the FCA confirms that transactions by PDMRs will only have to be disclosed where the threshold of €5,000 is met (this has not changed from the original proposal). The FCA has said, however, that issuers may disclose, on a voluntary basis, all transactions regardless of the threshold if they wish. The FCA also states that ESMA is considering the issue of currency conversion here, and how such conversions from Euros to local currencies will work in practice;
- Proposed systems and controls rule - the FCA had suggested new eligibility and continuing obligations rules regarding systems and controls around clearance procedures for PDMRs. This is because the Model Code will be deleted. A proposed Annex 2 to Chapter 9 of the Listing Rules set out guidance on how these rules might be met. However, some respondents were concerned that a two-tier dealing code was being introduced with insufficient guidance from the FCA and therefore the proposals have been dropped (although the Model Code will still be deleted). The FCA notes the suggestion of an industry-led development of codes of best practice and states that it would support such a development.
- Delaying disclosure of inside information - CP 15/38 suggested that DTR 2.5.5G should be deleted. This sets out FCA guidance stating that "other than in relation to impending developments or matters described in DTR 2.5.3R or DTR 2.5.5AR, there are unlikely to be other circumstances where delay would be justified". The FCA has decided not to delete this on the basis that the relevant guidelines to be issued by ESMA have not yet been finalised.
- Insider Lists, DTR 2.8 - the FCA states that it will provide information on its website in due course relating to the electronic means to submit insider lists to the regulator.
Additional points to note
- The FCA maintains its position of removing Handbook provisions which overlap with provisions of EU MAR, and replacing them with signposts to the Regulation itself. It will not be copying out any aspects of EU MAR into the Handbook, will not be providing direct interactive hyperlinks to the relevant provisions of EU MAR, and will not be referencing any of the recitals of EU MAR in the Handbook. It has made minor drafting changes to the Handbook to ensure consistency with EU MAR.
- The FCA notes that, as well as feedback on the two consultation papers themselves, they also received a considerable amount of feedback on areas outside the scope of the consultation where the respondents felt further guidance on the new regime may be helpful.
- The FCA states that several respondents asked it to use its power under section 139A FSMA to provide guidance on possible clarifications to the interpretation of the Level 1 and Level 2 measures. It will consider whether it is appropriate for it to exercise this power on a case-by-case basis, so has not ruled this possibility out.
Areas on which we may see further guidance
- The FCA sets out in Chapter 4 of its Policy Statement a number of areas which: (i) were raised in responses to its Consultation papers, but (ii) were not part of the original proposals in those CPs, but (iii) which the FCA is considering further. The FCA states it is considering the appropriate approach for each of these areas and that if it considers further guidance necessary, it will "endeavour to bring this forward" either at an EU or domestic level. It may also consult on some of those issues in future.
Issues raised include the following:
- PDMR reporting requirements - how to interpret Articles 19(1) and (3) (PDMR reporting a dealing to the issuer and the regulator and issuer reporting to the market) given that they both refer to a similar three-day notification period.
- Preliminary results and quarterly reporting - how to interpret closed periods as set out in Article 19(11) in the light of UK practice of prelims announcements and voluntary and compulsory quarterly reports.
- Insider Lists- the information to be provided for UK nationals in the column of the insider list which refers to a "National Identification number", what happens if a person refuses to communicate personal information, and whether agreement to be included on an insider list can be obtained by way of a click-through email.
Further information
Please speak to your usual Ashurst contact if you wish to discuss any of the issues raised above.
