CESR launches a 2nd set of draft guidance for public consultation on the operation of the Market Abuse Directive. Following the first two years of experience gained under the new market abuse regime, CESR is of the view that this is the right time to provide further guidance to market participants regarding common understandings developed amongst supervisors with the intention of achieving a convergent application of the legal requirements on a day-to-day basis.
This work is intended to compliment the ‘Call for Evidence’ on the evaluation of the supervisory functioning of the EU market abuse regime. The consultation period on the ‘Call for Evidence’ closed on 31 October 2006 and responses are available on CESR’s website under past consultations. As part of the ‘Call for Evidence’ on the functioning of MAD, CESR organised a public hearing which took place on 17 October 2006, at CESR’s premises in Paris. At the hearing, market participants indicated that they had not only found the first set of CESR guidance issued in March 2005 helpful, but also requested further guidance.
In this second draft guidance issued for consultation today, CESR has therefore developed in relation to Articles 1-6 of the Directive, a draft common understanding amongst CESR Members, regarding treatment of the following aspects of the Directive and associated issues concerning market abuse:
- What constitutes inside information?:
The guidance in this context gives further clarification on: ‘information of a precise nature’ as a term set out in the Directive; further guidance on information on making information public; amplifies what is meant by the concept ‘information likely to have a significant price effect’; a non exhaustive list of purely indicative types of event or information which may constitute inside information; - When is it legitimate to delay the disclosure of inside information?:
CESR provides a few indicative examples of the two circumstances mentioned in Article 3 (1) where it provides for the legitimate delay of disclosure of insider information. For example, the guidance provides indicative examples in relation to: confidentiality constraints relating to competitive situations; Product development; Selling of major holdings in another issuer; Impending developments that could be jeopardised by disclosure. - When are client orders inside information?:
This includes guidance regarding client’s pending orders as inside information; guidance of a ‘precise nature’;- Insider lists in multiple jurisdictions
:
CESR proposes and would commit itself to a mutual recognition system to be put in place (i.e. a competent authority would accept an insider list maintained in accordance with the rules of another CESR member).
The development of this guidance by CESR's permanent working group, CESR-Pol, has been informed by the experience gained by CESR Members during the transposition period and gathered from the day-to-day application of the Directive. Where relevant, CESR-Pol has taken into account the advice provided by CESR to the European Commission in framing the implementing measures for the Directive. The European Commission has also been consulted in development of the draft guidance and its comments taken into account.
CESR is inviting all interested parties to submit comments on the draft guidance by 2 February 2007 to Mr Fabrice Demarigny, CESR’s Secretary General, by posting the response on line in the section Consultations on CESR’s website (www.cesr.eu).
