The recently agreed Listing Act includes changes to the rules under the EU Market Abuse Regulation (MAR) on share buy-backs, market soundings, issuer obligations, managers' disclosures and other matters. Many of the changes could take effect as early as the summer of 2024.

The agreed text still needs to go through the stages of formal adoption by the European Parliament and the Council of the EU, revision and translation into the EU's official languages, signature and publication in the Official Journal. The amending Regulation will enter into force 20 days after publication, which could take place over the summer.

Most of the changes to MAR will apply from the date of entry into force of the amending Regulation although the changes to the issuer disclosure obligations mentioned below will take effect 18 months after that date (perhaps as soon as Q4 2025).

Share buy-backs. The amendments will simplify the reporting obligations for issuers using the safe harbour for share buy-backs. Issuers will only have to report and publish aggregated trade information (aggregated volume and the weighted average price per day per trading venue), instead of trade-by-trade data. In addition, issuers will only have to report data to the competent authority of the most relevant market in terms of liquidity in the shares, instead of to the competent authority of each market on which the shares are traded.

Inside information – front running. The definition of inside information already includes, for persons charged with the execution of orders concerning financial instruments, the example of 'precise' and 'price sensitive' information conveyed by a client relating to a client’s pending orders in financial instruments. The amendments will clarify that the example covers information conveyed by others acting on behalf of a client or known by virtue of the management of proprietary accounts or managed funds, and covers anyone who has the relevant information.

Market soundings. The amendments will make clear that the main market sounding procedures set out in MAR are optional (rather than mandatory). Disclosing market participants complying with those procedures will still benefit from a safe harbour from the prohibition against the unlawful disclosure of inside information but non-compliance will not create a presumption of unlawful disclosure. It will still be mandatory to consider whether a disclosure involves inside information and to inform a recipient that disclosed information has ceased to be inside information (and to comply with the associated record-keeping requirements). However, the amendments will also simplify the 'cleansing' process by removing the obligation to inform a recipient where the information has already been publicly announced. The amendments will also make clear that the definition of a market sounding covers disclosures not followed by an announcement of a transaction.

Liquidity contracts. Liquidity contracts between an issuer and a market maker in the issuer's securities can be treated as 'accepted market practices' exempted from the prohibition against market manipulation if specified conditions are met. The amendments will remove the requirement for the operator of an 'SME growth market' to be a party to the liquidity contract.

Issuer disclosure – protracted processes. The amendments will remove the requirement for issuers publicly to disclose inside information on "intermediate steps in a protracted process intended to bring about, or that result in, particular circumstances or a particular event" (to remove the need to announce mere intentions or steps in ongoing negotiation – although issuers currently may be able to delay disclosing those steps where the conditions for delayed disclosure are met). Instead, the issuer's obligation to disclose will only arise when the final circumstances or events have occurred (and issuers will not have to notify the competent authority of the non-disclosure of the intermediate steps). The Commission will be empowered to adopt a delegated regulation specifying a non-exhaustive list of when the announcement obligation arises in such cases (such as when the core elements of a merger or other agreement have been agreed). However, information about the intermediate steps may still be inside information for the purposes of the prohibition against insider dealing and issuers will still be required to keep the information confidential pending disclosure and to maintain insider lists in relation to that information.

Issuer disclosure – delayed disclosure. Currently, issuers can delay the public disclosure of inside information if immediate disclosure would prejudice their legitimate interests, delay is unlikely to mislead the public and the issuer is able to ensure the confidentiality of the information (but must inform the competent authority of the delay, with an explanation, immediately after the disclosure or, at Member State option, upon the request of the competent authority). The amendments will clarify the condition relating to misleading the public by replacing it with a condition that the delayed information must not be "in contrast with the latest public announcement or other type of communication by the issuer" on the same matter (reflecting, in part, existing ESMA guidelines on the application of the current condition). The Commission will be empowered to adopt a delegated regulation specifying a non-exhaustive list of situations meeting this condition.

Credit institutions. MAR also currently allows credit institutions to delay disclosure of inside information where disclosure would present a risk to financial stability (if other conditions are met). The amendments will extend these provisions to parent undertakings of credit institutions. 

Insider lists.  The implementing technical standards under MAR relating to the maintenance of insider lists currently require issuers on SME growth markets to comply with less onerous obligations with respect to the inclusion of some personal details of persons having access to inside information. The amendments will require ESMA to draft changes extending those less onerous obligations to the insider lists of other issuers. ESMA will be required to deliver the draft changes to the Commission within nine months of entry into force of the amending Regulation.

PDMR disclosures. The amendments will increase the threshold at which persons discharging management responsibilities (PDMRs) must disclose their transactions in an issuer's securities. The threshold will increase from €5,000 to €20,000 but Member States will have a discretion to increase the threshold to €50,000 or to reduce it to €10,000. The amendments will also permit additional types of dealings by PDMRs in 'closed periods' (such as dealings resulting from discretionary management of assets and transactions based on pre-determined terms).

Cross-market surveillance. The amendments will require competent authorities to put in place mechanisms to exchange order data from trading venues to facilitate cross-market surveillance.

Authors: Marc Benzler, Caroline Dawson, Chris Bates