On the 23rd September 2022, the European Securities and Markets Authority (“ESMA”), the European Union’s securities markets regulator, published its updated Questions and Answers (“Q&As”) on the Market Abuse Regulation (No. 596/2014) (“MAR”). The purpose of the Q&As is to promote common, uniform and consistent supervisory approaches and practices in the day-to-day application of MAR. This is done by providing responses to questions asked by the public, financial market participants, competent authorities, and other stakeholders, in relation to a variety of topics falling within the scope of MAR.
By virtue of the updated Q&As, two new queries were answered in relation to the disclosure of inside information.
The first query relates to whether an issuer should generally consider the first financial guidance for a given financial year to be inside information, bearing in mind that such financial guidance forms part of the financial reports prepared under the Transparency Directive (Directive 2004/109/EC) (“TD”) and national legislation, which do not require or even anticipate premature disclosure. ESMA clarified that in principle, the financial expectations to be published by an issuer in certain jurisdictions (i.e. financial guidance) must follow the schedule established under the TD. However, should a piece of inside information under Article 7 of MAR be identified while preparing the financial guidance, the half-yearly or the yearly reports, then that piece of inside information has to be immediately published unless delayed disclosure under Article 17 of MAR takes place, irrespective of the date of publication of the financial guidance, the half yearly or the yearly report as determined by the relevant national legislation.
The second query relates to whether an issuer is permitted to take into consideration market analysts’ expectations (consensus), when considering whether an event or items in a financial report or the first financial guidance for a given financial year may constitute inside information. ESMA explained that all available information has to be considered by issuers to determine whether a piece of information may constitute inside information in accordance with Article 7 of MAR. This also includes the consensus of market analysts’ expectations, which may impact the market expectation or investor sentiment and would form part of an investment decision, as described in Article 7(4) of MAR. In this new Q&A, ESMA also reiterated the position that delayed disclosure of inside information is likely to mislead the public where, amongst others, the inside information is in contrast with the market’s expectations, where such expectations are based on signals that an issuer has previously sent to the market, such as interviews, roadshows or any other type of communication organised by an issuer or with its approval.
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