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  • Rachel Barrett

Market Abuse Regulation Insider Lists - Technical Briefing updated

Updated technical briefing following the FCA response to the consultation paper.


UK listed companies have been required to maintain a record of individuals in possession of inside information for a number of years. These rules are being extended through the introduction of the Market Abuse Regulation (“MAR”) by the European Union. Although MAR came into force in July 2014, the majority of MAR’s provisions will apply to companies listed on the main market from 3 July 2016. For SME growth markets, it was anticipated that MAR would apply in a reduced form from 3 January 2017 however, in a recent ‘Inside AIM’ article, the London Stock Exchange have confirmed that MAR will apply without any relaxations from 3 July 2016 (see below for a further explanation of this change).

The European Securities and Markets Authority (“ESMA”) have published the final technical standards which provide further information on the required content and format of an insider list to be maintained under MAR.

In April 2016, the FCA issued PS16/13 which deals with the implementation of MAR in the UK and related finalised amendments to the FCA Handbook. These changes will abolish the Model Code.

In May 2016 the FCA issued clarification as to how companies should operate closed periods in relation to the announcement of preliminary results and the publication of the annual accounts and indicated that where the prelims include all the information expected to be included in the published accounts there will be no 30 day closed period prior to the publication of the accounts. The announcement can be found here -

The need for an IT solution

Howells have developed IMTrack® as some requirements make it clear that the use of paper records and spreadsheets will increase the risk of non-compliance with MAR:

  • Any updates to the insider list must be date AND time stamped;

  • Submission of an insider list to the competent authority in a required format AND to be able to do so for any point in time in the previous five years;

  • The requirement for insiders to acknowledge that they understand their duties, obligations and the penalties for breach.

Following our review of the Final Report, we set out below further clarification on areas that have been the subject of queries from clients:

Comparison of current rules and MAR

Following our review of the Final Report, we set out below further clarification on areas that have been the subject of queries from clients:

Q. How should companies deal with insiders at third parties (e.g. printers and advisors)

Throughout the consultation period the debate was whether an issuer must maintain the list of insiders at third parties or whether the issuer could simply include the name of the third party firm and a contact name and leave it to the third party to keep their own list which could then be amalgamated with the issuer’s list when a competent authority request is made.

ESMA confirmed that the responsibility for the provision of a full insider list (to include all insiders at a third party firm) remains with the issuer even if the third party is responsible for maintaining and providing their internal list to the issuer. Therefore, if the authorities request a copy of the insider list, the issuer must be capable of submitting an insider list containing only “natural persons”. As a consequence of this, all issuers will need to audit the insider list management of their third party suppliers to ensure that the third party’s internal insider list can be provided and integrated with the issuer’s insider list in a timely manner.

It should be noted that the April 2016 issue of the amended FCA handbook (specifically the removal of DTR 2.8.8 G) has led some to conclude that issuers must maintain the entire insider list; they cannot ask a third party advisor (e.g. lawyer, accountant, printer, banker etc.) to maintain their own separate list for amalgamation if a request is made.

The advice we have received so far is that article 18(2) MAR anticipates the maintenance of insider lists by third parties and therefore the issuer is not required to retain full personal details of all insiders at a third party advisor so long as the advisor can immediately provide the required details in accordance with MAR. Each issuer must seek its own legal advice on this point.

In any event, IMTrack® can be used to record all the details of all persons with access to insider information at third parties if clients decide to adopt this approach.

Q. Should we have one single list or multiple lists? How do we deal with permanent lists?

ESMA will allow the choice of two approaches. An issuer can either operate an insider list with deal specific sections which would show all persons who are insiders on a particular deal, or they can choose to also include a “permanent insider section” (typically including senior personnel) alongside the separate sections for each deal/project. If the permanent insider section approach is chosen, any person who is a permanent insider will not have to be included on each deal specific section but will be assumed to have knowledge of all projects. In our view it is likely that most companies will choose to operate a permanent insider section as this is most similar to current practice.

Q. Do I have to provide an exact list status at any time in the past?

Yes, this is a requirement. The system used must be able to provide the insider list in the prescribed format showing the list status at any requested date and time over the past five years. Date and time stamping of any changes or updates must also occur.

Q. In what format would we have to provide information to the competent authority if requested?

ESMA has provided templates in the Final Report confirming the format for submission of the insider list sections and the permanent insiders section (if this option is used). Originally they suggested that MS Excel would be the required format but they have withdrawn this requirement and will now allow each competent authority to choose the required format and publish this on their website. In April 2016 the FCA confirmed that they will confirm the program to be used for submission in due course.

Q. How quickly do we have to update our lists?

Not fully clear. ESMA have said that they “support the argument” that the list should be updated on the same day as a change occurs but they are not mandating this. However, ESMA does state that “lists should be kept up to date at all times and not only upon receipt of a request from a competent authority”.

Q. Will the relaxation for AIM and other “SME Growth Markets” work?

The intention of the EU was that AIM and other SME Growth Markets would not be required to comply with the new rules until 3 January 2017. It was also intended that there would be no requirement for an AIM/SME Growth Market company to continually maintain an insider list as long as it can provide a full list if it is requested by its competent authority.

Unfortunately these relaxations relied on other EU legislation being introduced before 3 July 2016. This will not be the case. The related legislation (MiFiDII) is not anticipated to be finalised until 2018 at the earliest.

This means that the SME relaxations that were intended to apply to AIM (and other similar EU markets) will not. All AIM companies must therefore adopt the more onerous MAR provisions from 3 July 2016.

This position has been confirmed by the London Stock Exchange.