Obligations before conducting market soundings

Prior to conducting a market sounding, the DMP must first assess whether that market sounding will involve the disclosure of inside information (Article 11(3) of the MAR, recital (34) of the MAR). The result of this assessment and the corresponding reasons must be documented, updated if necessary and provided to BaFin on request. This obligation applies to each disclosure of information throughout the course of the market sounding (third sentence of Article 11(3) of the MAR), in other words also to cases in which inside information is not concrete.

Under Article 11(5) of the MAR, the DMP has to obtain the consent of the person receiving the market sounding (the “market sounding recipient” – MSR) and inform that person about the consequences in line with points (b) to (d) of paragraph (5).

The DMP must then establish a procedure for conducting market soundings (Article 2 of Commission Delegated Regulation (EU) 2016/960) that also includes the extensive information obligations under Article 11(5) of the MAR. Commission Delegated Regulation (EU) 2016/960 expands on the further requirements of Article 11(3) – (6) and (8) of the MAR and specifically lists the standard set of information to be communicated to the MSR (Article 3 of Commission Delegated Regulation (EU) 2016/960). Additionally, Article 3(5) of Commission Delegated Regulation (EU) 2016/960 imposes a requirement for a level playing field, under which the same level of information must be communicated to each MSR.

Obligations during a market sounding

During the sounding procedure, the DMP is subject to an extensive documentation obligation relating to both the identity of the MSRs and the content of the information communicated (second subparagraph of Article 11(5) of the MAR).

The data regarding the MSRs must be recorded in a list (second subparagraph of Article 11(5) of the MAR in conjunction with Article 4 of Commission Delegated Regulation (EU) 2016/960). Article 4 of Commission Delegated Regulation (EU) 2016/960 contains specific requirements for this list; in particular, it is necessary to document the date and time of each communication of information.

In addition, the DMP must document all the information that is disclosed, together with the date and time of each individual disclosure.

Cleansing

As soon as the DMP assesses that inside information has ceased to be inside information, it must notify this fact to the MSR without undue delay. This applies in all cases, in other words also if the inside information has ceased to be inside information because it has now been disclosed to a broad investing public (for example by means of an ad hoc disclosure under Article 17 of the MAR).

However, the aforementioned obligation under the first subparagraph of Article 11(6) of the MAR is not a condition for exempting the DMP from the prohibition of disclosure.

The information communicated to the MSR must comply with the requirements of Article 5 of Commission Delegated Regulation (EU) 2016/960. Under the second subparagraph of Article 11(6) of the MAR in conjunction with Article 4 of the Commission Implementing Regulation (EU) 2016/959, the information communicated to the MSR must be recorded in accordance with the template set out in Annex III to Commission Implementing Regulation (EU) 2016/959.

Format and retention period for records

Under Article 6 of Commission Delegated Regulation (EU) 2016/960, all records necessary for market soundings (Article 11(3) to (8) of the MAR) must be kept in a durable medium and retained for a period of at least five years (Article 11(8) of the MAR).

In addition, written records or notes must be prepared for all information communicated verbally or by telephone. Use of the templates in accordance with Annexes I and II of Commission Implementing Regulation (EU) 2016/959 is mandatory for this purpose (Article 2 of Commission Implementing Regulation (EU) 2016/959 in conjunction with point (d) of Article 6(2) of Commission Delegated Regulation (EU) 2016/960).

The DMP must provide its records to BaFin on request (Article 11(5) of the MAR, Article 6(4) of Commission Delegated Regulation (EU) 2016/960). There is no requirement to provide the records without such a request.