Points (b) to (d) of Article 7(1) of the MAR contain separate definitions of certain types of inside information.

Commodity derivatives

In relation to commodity derivatives, inside information is information of a precise nature that has not been made public relating, directly or indirectly, to one or more such derivatives or relates directly to the related spot commodity contract and which, if it were made public, would be likely to have a significant effect on the prices of such derivatives or related spot commodity contracts, and where this is information which is reasonably expected to be disclosed or is required to be disclosed in accordance with legal or regulatory provisions at the European Union (EU) or national level, market rules, contract, practice or custom, on the relevant commodity derivatives markets or spot markets (point (b) of Article 7(1) of the MAR). To provide further guidance for market participants, ESMA has published Guidelines containing a non-exhaustive list of inside information relating to commodity derivatives (Article 7(5) of the MAR).¹

Emission allowances

In relation to emission allowances or auctioned products based thereon, point (c) of Article 7(1) of the MAR defines inside information as information of a precise nature which has not been made public, relating, directly or indirectly, to one or more such instruments and which, if it were made public, would be likely to have a significant effect on the prices of such instruments or on the prices of related derivative financial instruments.

On the one hand, this may concern measures or events that impact the direct operation of an installation or the aviation activities of an emission allowance market participant. These include, for example, (unscheduled) downtime, the partial shutdown or final closure of installations, investment decisions relating to the construction of new installations, changes in the energy efficiency of large installations, for example due to a decision to modernise them to ensure the more efficient use of energy or a switch to a different fuel in an installation. It should be noted in this context that the events referred to above usually only constitute inside information if the event in question, taken in isolation, is also significant in terms of its potential to have a significant effect on prices. Examples of potential information relating to aviation activities that is subject to a notification obligation includes (partial) fleet downtime (route, aircraft), an increase in the fleet (route, aircraft) or a switch to different aircraft (e.g. new models that emit substantially less CO2).

On the other hand, external factors such as fundamental decisions by the regulatory authorities, e.g. with regard to the general admissibility of fuels used, the free allocation quota or other structural reforms affecting the European emissions trading scheme (EU-ETS) may constitute inside information.

Finally, knowledge about concrete plans to trade emission allowances, auctioned products based on these plans or related derivative financial instruments may also constitute inside information.

The question of which inside information triggers a prohibition of trading must be distinguished from the question of which inside information triggers a disclosure obligation for emission allowance market participants under Article 17(2) of the MAR. Please refer to section I.3.2.1.3.

Execution of orders

Finally, for persons charged with the execution of orders concerning financial instruments, the term “inside information” also means information conveyed by a client and relating to the client’s pending orders in financial instruments which is of a precise nature relating, directly or indirectly, to one or more issuers or to one or more financial instruments and which, if it were made public, would be likely to have a significant effect on the prices of those financial instruments, the price of related spot commodity contracts, or on the price of related derivative financial instruments (point (d) of Article 7(1) of the MAR).

This clarifies that trade-related information (e.g. knowledge about the existence of a large order) may also constitute inside information. The existence of the requirements relating to the elements of inside information must be assessed on the basis of the general standards (see sections I.2.1.1 to I.2.1.4). This means that information about the existence of a (large) order does not have to be regarded per se as inside information, but only if the conditions for the existence of inside information are met in individual cases.

Research and estimates based on publicly available data

The first sentence of recital (28) of the MAR sets out that research and estimates prepared on the basis of publicly available data should not per se be regarded as inside information. This rule is designed to ensure that market participants can collect and assess publicly available information without a risk that they will be subject to the prohibitions in Article 14 of the MAR. Transactions that are carried out on the basis of such research are not based on privileged knowledge of the market participant, but rather on their better research capability.

The second sentence of recital (28) of the MAR sets out an exception to this principle if the publication or distribution of information is routinely expected by the market, and where such publication or distribution contributes to the price formation process of financial instruments, or the information provides views from a recognised market commentator or institution that may inform the prices of related financial instruments. In such cases, research and estimates based exclusively on publicly available data may also constitute inside information within the meaning of Article 7(1) of the MAR.

Existence of inside information in the case of an application for admission to trading

In the case of financial instruments for which merely an application has been made admission to trading, the question arises as to the criteria to be applied for assessing the potential to have a significant effect on prices with regard to the definition of inside information. This question can often only be answered on a case-by-case basis. If the financial instruments are already included in another trading segment or are traded on an OTC trading platform, the potential to have a significant effect on prices can be assessed on the basis of this price information. If a (base) prospectus has been published and a price range was stated in the course of the subscription period, if applicable, this may also be used as a basis for assessing the potential to have a significant effect on prices. This means that there may inside information in individual cases if significant amendments to the content of the prospectus trigger a supplement, for example, as a result of which it must be assumed that there will be a change to the price range in the subscription process. In addition, there may be market assessments of the expected price range or valuations relating to the company, on the basis of which it could be possible to hypothetically put a figure on the potential to have a significant effect on prices.

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