The FSA has announced that as of 6 March 2009, persons discharging managerial responsibilities (PDMRs) will be able to enter into trading plans without breaching the Model Code.


The FSA has amended the Model Code with effect from 6 March 2009 to enable PDMRs to enter into "trading plans". "Trading plans" are defined as a written plan between a PDMR and an independent third party which sets out a strategy for the acquisition or disposal of securities by the third party on behalf of the PDMR.

The changes are designed to enable PDMRs to enter into long-term trading strategies without having to structure their dealings around prohibited periods. This gives PDMRs additional flexibility to deal in securities without either breaching the Model Code or placing themselves under suspicion of dealing on the basis of inside information.

Trading Plans

Under the amended Model Code, a trading plan may be entered into at any time other than during a prohibited period. To instigate, vary or cancel a trading plan, the PDMR must seek clearance from the relevant person within the company in accordance with paragraph 4 of the Model Code (i.e. in the same was as for any other dealing in the company's shares). The provisions of the Model Code which state that a response to a request for clearance to deal must be given within five business days and that the dealing must take place within two business days of clearance being received will apply to a request for clearance to instigate, vary or cancel a trading plan.

The PDMR will also be subject to the notification requirements under DTR 3.1.2 to notify the company of dealings under the trading plan and will therefore need to make sure that the person operating the plan notifies the PDMR promptly of any transactions entered into pursuant to the plan. A PDMR may be given clearance to cancel a trading plan during a prohibited period in exceptional circumstances, for example if the PDMR is in severe financial difficulty. However, even if there are exceptional circumstances, cancellation will only be permitted if the PDMR does not have inside information at the time of cancellation, obtains prior clearance from the company to deal and consults the FSA prior to cancellation.

During prohibited periods, PDMRs will not be able to:

  • amend the plan;
  • give any instructions to the third party to deal in the securities;
  • exert any influence or discretion over dealings under a trading plan; or
  • cancel the plan (except in exceptional circumstances).

The independent person operating the trading plan will be able to deal in the securities (in line with the trading plan) during both open and prohibited periods.  

Action Required

Company secretaries should now update PDMRs on the changes to the Model Code. Companies who have adopted their own bespoke version of the Model Code should consider updating these to include trading plan provisions.

PDMRs considering setting up trading plans should ensure that they seek the required clearances before doing so and that the operator of the plan is required to notify them promptly of any dealing transacted under the plan.