Insights

The European Securities and Markets Authority (ESMA) has updated its guidelines regarding issuers’ ability to delay the disclosure of inside information in terms of article 17 of the Market Abuse Regulation (MAR). The updates mainly concern listed credit institutions, specifically to cater for the interaction between their obligation to publish inside information in terms of MAR and the EU prudential supervisory framework.

Background

Article 17 of MAR requires issuers to publicly disclose any inside information that directly concerns them as soon as possible. By way of example, an issuer’s decision to carry out redemptions, reductions and repurchases of own funds instruments and the related share premium accounts could technically qualify as inside information in terms of MAR, which would therefore require public disclosure.
However, issuers (including credit institutions) may delay the disclosure of inside information under article 17(4) of MAR (ordinary delay) and article 17(5) of MAR (financial stability delay) when certain conditions are met. In terms of article 17(4) of MAR, issuers can delay the disclosure of inside information under the following conditions: (a) immediate disclosure is likely to prejudice an issuer’s legitimate interest; (b) delay of disclosure is not likely to mislead the public; and (c) the issuer is able to ensure the confidentiality of the information. Previously, ESMA had issued guidelines to provide (i) a non-exhaustive and indicative list of legitimate interests of the issuers that are likely to be prejudiced by immediate disclosure of inside information; and (ii) a list of situations where delay of disclosure is likely to mislead the public.

Given the ever-evolving regulatory landscape within which credit institutions are required to operate, and the growing overlap that exists between issuers’ disclosure obligations under MAR and this regulatory landscape, ESMA (together with the European Banking Authority) has now updated its MAR guidelines, with a view to increasing certainty on credit institutions’ disclosure obligations vis-à-vis applicable prudential supervision rules.

Content of updated guidelines

The updated guidelines now include:

1. 2 new cases to the non-exhaustive list of legitimate interests (where immediate disclosure of inside information is likely to prejudice issuers’ legitimate interests), these being: (1) the case where credit institutions intend to carry out redemptions, reductions and repurchases of own funds, pending regulatory authorisation; and (2) the case of draft Supervisory Review and Evaluation Process (SREP) decisions or preliminary information related thereto; and
2. a separate section clarifying that: (a) Pillar 2 Capital Requirements (P2R) are highly likely to meet the definition of inside information under MAR; (b) Pillar 2 Capital Guidance (P2G) may be inside information under MAR, whenever assessed as price sensitive. In this respect, the updated guidelines also provide examples of situations where P2G is expected to be price sensitive.

Naturally, should P2G be deemed to be inside information in terms of MAR, it would require public disclosure as soon as possible, unless the conditions for a delayed disclosure under MAR are met.