In October 2008, the FSA published its quarterly consultation paper. In this consultation the FSA is seeking market participants' views on, among other things, its proposed changes to the Model Code set out in LR 9 Annex 1 R of the Listing Rules.

The Model Code is intended to prevent persons discharging managerial responsibilities (PDMRs) in listed companies placing themselves under suspicion of abusing inside information that they may be thought to have. It imposes restrictions on dealings by PDMRs in securities of listed companies.

Under the Model Code, PDMRs must receive clearance from the company's chairman (or a director designated by the board for this purpose) before dealing in the company's securities and, except in exceptional circumstances, clearance will not be given during any prohibited period, that is, a close period (broadly, a set period in the run up to any of the company's results announcements) or any period when there exists any matter which constitutes inside information in relation to the company. These rules can prevent PDMRs from engaging in legitimate long-term trading strategies.

It is therefore proposed that the Model Code be amended to allow PDMRs to enter into trading plans with independent third parties in non-prohibited periods. Provided these trading plans meet certain criteria, PDMRs will be able to deal in the company's securities in accordance with those trading plans regardless of whether or not such deals take place during a prohibited period. These criteria include the trading plan specifying (or including a written formula or algorithm for determining) the dates, prices and quantities of securities that can be dealt. Additionally, PDMRs will not be able to enter into, cancel or amend a trading plan during any prohibited period.

Any comments on the proposed amendments to the Model Code should be submitted by 6 December 2008.

View the full Quarterly consultation (No. 18) (104 page pdf).