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Market Abuse Regulation – adjusting market expectations

5 October 2017

We have seen in recent weeks that the Financial Conduct Authority (FCA) has been making enquiries of issuers in order to ascertain whether there has been a breach of the Market Abuse Regulation (MAR) where, following release of timetabled financial statements, there is a marked change to an issuer’s share price.

If a timetabled announcement has had an effect on the price of an issuer’s share price, should the inside information contained in that announcement have been disclosed sooner?

Where a listed company is announcing inside information to the market, it must include wording to that effect as well as details of the identity of the person making the declaration and their position within the company in the relevant announcement. Moreover, issuers are only permitted to delay the announcement of inside information under certain conditions. In practice, it is therefore important for listed companies to ensure that:

  1. insider lists are maintained and are compliant with the prescribed form required by MAR
  2. effective MAR compliant procedures are in place for the disclosure of inside information as and when it arises
  3. consolidated information is assessed against market expectations and information in the public domain is adjusted if inside information is available prior to timetabled announcements
  4. the timetable for board review and approval of consolidated information allows for such information to be reviewed and then announced without delay.

When should issuer’s include wording that announcements contain inside information?

Following the implementation of MAR, many issuers have taken the view that where interim results are in line with market expectations, those results are not inside information. Other issuers have included inside information wording on their interim results, even where those results appear to be in line with market expectations. Market practice in this area is yet to be determined, however issuer’s should have procedures in place so that the issuer’s board or disclosure committee can be definitive on whether an announcement contains or may contain inside information.

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The content on this page is provided for the purposes of general interest and information. It contains only brief summaries of aspects of the subject matter and does not provide comprehensive statements of the law. It does not constitute legal advice and does not provide a substitute for it.

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