- On 11 November 2020, the FCA published a review of delayed disclosure of inside information (DDII)1 by issuers under MAR2 as part of its latest Primary Market Bulletin newsletter3.
- As part of this review the FCA analysed all 1,610 DDII notifications it received between MAR coming into force on 3 July 2016 and 12 November 2018.
- The review highlighted the FCA's concerns about issuers' awareness of their obligations regarding the identification, delay of disclosure, and notification of delayed disclosure of inside information under MAR, in particular when dealing with periodic financial results, unscheduled trading updates and board changes. As a result, the FCA intends to step up its monitoring activities in this area.
What does this mean for market participants?
- Issuers and their advisers should be prepared for the increased likelihood of queries from the FCA on DDII and MAR compliance more generally, particularly in response to significant share price movements or market rumours. The proper documenting of decision-making and seeking of advice continue to be vital in ensuring that issuers can address any FCA queries and avoid further scrutiny or regulatory action.
- The FCA has reiterated its view that information relating to periodic financial results could constitute inside information regardless of market expectations, which differs from the position currently taken by many market participants. Issuers may therefore want to review their financial reporting processes to ensure that any inside information arising can be identified promptly and handled correctly.
- While we note that the FCA's review period pre-dates the market volatility of the past year, the increased monitoring of trading updates will be especially relevant given ongoing economic uncertainty. Where an issuer's financial performance is not in line with market expectations and inside information arises, MAR requires this to be identified and announced as soon as possible and issuers producing trading updates should be prepared for the FCA to query any significant delays in disclosure.
- Issuers may also want to take this opportunity to review their inside information policies, procedures and training programmes more generally to ensure their management teams can make robust and timely decisions on the identification and disclosure of inside information, promptly submit any required DDII notifications and maintain appropriate records of compliance with their obligations under MAR.
- We would be delighted to discuss any questions you have around MAR compliance and provide you with the necessary training, checklists and templates to ensure that you are properly identifying, disclosing and documenting decisions in relation to inside information. Please contact Jon, Inigo, Patrick, Dom, Guy, Andy or your usual W&C contact for further assistance.
Key findings of the review
The FCA's main findings were as follows:
|Overall level of DDII notifications||
|Periodic financial information (eg annual / interim results)||
|Unscheduled financial information (eg trading updates)||
|Director / board changes||
5 DTR 2.2.9G
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