The European Securities and Markets Authority (ESMA) has published an updated version of its Questions and Answers (Q&As) on the Market Abuse Regulation (MAR) (ESMA/2016/1644).
New Q&As have been added which deal with the reporting of dealings by managers (PDMRs), and what constitutes an investment recommendation. To see the Q&A in full, click here. For a brief summary of the new Q&As, see below.
The reporting of dealings by managers (PDMRs)
Section 2 of the Q&A deals with managers' (PDMRs') transactions.
New Q&A 3 clarifies that, when calculating whether the annual threshold (€5,000 in the UK) has been reached, transactions carried out by a PDMR should not be aggregated with those carried out by any of his or her closely associated persons. For example, if a CEO buys €4,000 of equity and his or her spouse buys €2,000, neither of them will have reached the €5,000 threshold, and a notification is therefore not required for either.
Q&A 4 confirms that financial instruments which are received as a result of donations, gifts or inheritance are potentially notifiable and need to be considered when ascertaining whether the annual threshold (€5,000 in the UK) has been reached. ESMA clarifies the basis on which any such financial instruments should be valued for this purpose.
Finally, new Q&A 5 clarifies that, when shares are received as part of a remuneration package but receipt is dependent on the satisfaction of a condition, the time for notification is the time of satisfaction of the condition rather than the time when the package was granted.
What constitutes an "investment recommendation"
Section 3 of the Q&A deals with investment recommendations.
New Q&A 5 clarifies that any communication containing purely factual information on a financial instrument or issuer will not constitute an investment recommendation under MAR, provided that it does not explicitly or implicitly recommend or suggest an investment strategy.
Q&A 6 deals with communications that only report or refer to a previously disseminated investment recommendation and do not include any new elements of opinion or valuation or confirmation of a previous opinion or valuation.
ESMA states that such a communication will not amount to a new investment recommendation, but would still be subject to Article 7 of Delegated Regulation 2016/958 (the technical arrangements for the objective presentation of investment recommendations or other information recommending or suggesting an investment strategy and for disclosure of particular interests or indications of conflicts of interest), if it is disseminated by the producer of the investment recommendation, and therefore such a communication must include, the date and time of first issuance of the investment recommendation. ESMA further clarifies that if a communication reports or refers to a former investment recommendation but contains either confirmation of the previous opinion or valuation or new elements of opinion or valuation which may be based on new facts or events concerning the issuer which are considered in the valuation, it will be viewed as a new investment recommendation, and all aspects of Delegated Regulation 2016/958 would need to be considered. Finally,
ESMA notes that, where a person disseminates recommendations produced by third parties, articles 8 to 10 of Delegated Regulation 2016/958 would have to be considered.
New Q&As 7 and 8 deal with investment recommendations in respect of derivatives including when a derivative traded solely outside a trading venue may be within the scope of MAR, and how to determine whether a recommendation on the same financial instrument has previously been given.
To see the Q&A in full, click here.