ESMA’s consultation paper and its fight against disclosure of insider information 

by , on Nov 12, 2021 08:00:11 AM

Issuers must publicly reveal inside knowledge that directly affects them promptly, according to Article 17 of the Market Abuse Regulation (MAR). Issuers may withhold the publication of confidential information under article 17(4) of the MAR and, in the instance of credit and/or financial institutions, article 17(5) of the MAR if the applicable circumstances are met. Issuers can withhold the publication of inside knowledge under article 17(4) if the following conditions are met:  

1. Immediate disclosure is expected to jeopardize an issuer’s legitimate interests;  
2. delayed disclosure is unlikely to deceive the public; 
3. and the issuer can secure the information’s confidentiality. 

In this regard, ESMA previously imposed guidelines (MAR Guidelines) that focus on providing a non-exhaustive, indicative list of issuers’ legitimate interests that are likely to be harmed by prompt disclosure of inside information, as well as a list of situations where delaying disclosure is likely to deceive the public.  

ESMA has launched a consultation paper with an aim to broaden the MAR Guidelines in the perspective of the interplay between the transparency duties under MAR vis-à-vis inside information and the EU prudential supervisory framework in order to strengthen and enlarge on the MAR Guidelines. ESMA is seeking feedback on proposed amendments to its Market Abuse Regulation (MAR) via this consultation document. 

1. to the current list of legitimate interests: (i) redemptions, reductions, and repurchases of own funds awaiting regulatory approval; and (ii) draft Supervisory Review and Evaluation Process (SREP) judgments or any preliminary information therefrom;  
2. includes a new section to the MAR Guidelines stating that Pillar 2 Capital Requirements (P2R) and Pillar 2 Capital Guidance (P2G) are probable to fulfill the MAR definition of inside information, requiring public disclosure as soon as practicable unless the circumstances for a delayed disclosure are achieved. 

The European Securities and Markets Authority (ESMA) has told the market that it will review the feedback on the consultation paper; thus, aiming to issue a final report with modified MAR Guidelines by the end of 2021.  

Given the topics on which ESMA is seeking feedback, listed institutions were encouraged to review the consultation paper thoroughly and, if so motivated, provide online replies by August 27, 2021. 

 

Author: Maila Cimino 

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