In particular, Article 17 of the MAR is concretised at European level through a Commission Implementing Regulation and a Commission Delegated Regulation. In addition, important information on commodity derivatives and self-exemption is included in the relevant guidelines on which the European Securities and Market Authority (ESMA) has already consulted or which it has recently published. The German Securities Trading Act – which has been revised in line with the European requirements through the German First Act Amending Financial Markets Regulations (Erstes Finanzmarktnovellierungsgesetz) – includes supplementary provisions. The current version of the German Securities Trading Reporting and Insider List Regulation (Wertpapierhandelsanzeige- und Insiderverzeichnisverordnung – WpAIV) will remain applicable for the time being, but European law has priority.

At first glance, not much has changed for issuers of financial instruments on the regulated market, which were already subject to this ad hoc obligation. However, several provisions have been added, e.g. concerning self-exemption, or tightened up, e.g. on addressing rumours. This will result in a change in BaFin’s administrative practice. Moreover, other issuers are now also covered by the ad hoc obligation. For this reason, BaFin will revise its Issuer Guideline.

Addressees

The ad hoc disclosure obligation now applies not only for issuers which have applied for, or have been granted, admission to trading on a regulated market in a Member State of the EU for their financial instruments but also for issuers which trade, or intend to trade, on a multilateral trading facility (MTF). This is subject to the issuer having expressly consented to its inclusion in trading, by having applied for this either itself or through a third party or having consented to its inclusion. The latter may also be provided retrospectively; in this case, the ad hoc obligation will apply from the date of approval. The issuer’s consent must be documented.

Moreover, in future issuers which have merely been granted admission to trade on an organised trading facility (OTF) for their financial instruments will likewise be covered by the ad hoc disclosure obligation. However, here the ad hoc obligation will only become applicable once they have been included. Due to the postponement of the European Markets in Financial Instruments Directive II (MiFID II), this will only come into effect from 3 January 2018.

Inside information which must be publicly disclosed

Inside information is defined in Article 7 of the Market Abuse Regulation. As a rule, inside information is thus information of a precise nature, which has not been made public, 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 or on the price of related derivative financial instruments. The phrase “information of a precise nature” is identical with the wording of the old Market Abuse Directive and corresponds to the phrase “concrete information” in the old Securities Trading Act.

The MAR provides separate definitions of inside information for commodity derivatives and for emission allowances. By way of guidance for market participants, ESMA’s planned guidelines will include a non-exhaustive list of inside information relating to commodity derivatives. The ad hoc obligation for issuers of emission allowances will not come into effect until 3 January 2018.

Inside information may also include information which is associated with the execution of transactions in financial instruments. Since the issuer must be directly affected, as a rule information which only relates to the financial instrument itself will not trigger any disclosure obligation.

Date of public disclosure

The Market Abuse Regulation obliges issuers to inform the public as soon as possible of inside information which directly affects it.

The wording thus deviates from the current phrase in the Securities Trading Act (“without undue delay”); but this does not entail any changes from a legal point of view. The comments in the Issuer Guideline on the requirement to act without undue delay remain valid.

Self-exemption

Subject to certain conditions, issuers may delay disclosure of inside information. They may continue to do so, on their own responsibility, if immediate disclosure would be likely to prejudice the legitimate interests of the issuer, the delay will not mislead the public and the issuer is able to ensure the confidentiality of the information. Public disclosure may also be delayed in the case of a protracted process that occurs in stages, subject to the above-mentioned conditions.

In relation to the issues of when a legitimate interest is applicable and when delay of disclosure would mislead the public, the recently published ESMA guidelines contain a non-exhaustive list of such scenarios. The scenarios listed in section 6 of the WpAIV – which relate to ongoing negotiations concerning business activities and the outstanding consent of a governing body of the issuer – are expected to remain applicable. The guidelines merely apply for issuers of financial instruments, but not for participants on the market for emission allowances.

According to ESMA, the circumstances where delay of disclosure of inside information would likely mislead the public include where inside information contradicts market expectations which are based on signals that the issuer has itself provided at an earlier moment in time.

However, even if these conditions are fulfilled the issuer may only delay disclosure of the inside information as long as its confidentiality is guaranteed. Once this is no longer the case, it must disclose the information as quickly as possible. Pursuant to Article 17(7) of the MAR, this requirement also applies in the event of a sufficiently precise rumour arising. How the rumour enters the market is irrelevant. In its Technical Standards on market abuse, ESMA states that it is not necessary for the leak resulting in these rumours to derive from the issuer in order to trigger a disclosure obligation. The critical point is that transparency is established for the market as quickly as possible, for the purpose of investor protection.

Notification obligation concerning self-exemption

If an issuer has delayed disclosure of inside information, it must notify the competent authority of this delay in writing, immediately after publication. It must outline the extent to which the requirements for self-exemption were fulfilled.

An obligation to send the exemption notification and the advance notification at the same time no longer applies. However, this remains possible. Further information and comments on the technical means for delay of disclosure of inside information may be found in the implementing regulation and in the underlying ESMA draft documents.

Delay by credit and financial institutions

As well as the general possibility of exemption from the ad hoc disclosure obligation, there is now a special exemption for credit and financial institutions. They may delay disclosure of inside information – e.g. concerning temporary liquidity problems or liquidity assistance provided on a short-term basis – if this would jeopardise the stability of the financial system, the delay is in the public interest and the confidentiality of this information can be guaranteed.

In addition, the competent authority must agree to the delay. To do so, it will verify whether the conditions for this are fulfilled on the basis of the documentation which the institution must provide it with. It may also consult the national central bank, the macro-prudential authority and other competent national authorities.

Disclosure may only be delayed for the period which is in the public interest. The competent authority must evaluate at least on a weekly basis whether these conditions continue to be fulfilled. Otherwise, the institution must disclose the inside information immediately. More detailed requirements in this respect may likewise be found in the implementing regulation and in the Technical Standards of ESMA.

Advance notification

Section 15 (1) of the WpHG regulates the notification, public disclosure and transmission of inside information on the German market. BaFin will continue to receive advance notification of the ad hoc disclosure. This obligation now also applies for MTF issuers whose financial instruments are included in trading with their consent.

In addition, the ad hoc disclosure must be forwarded in advance to all of the national trading venues on which the financial instrument is admitted or included, irrespective of whether the issuer has provided its consent for this. The goal is to enable all of these trading venues to decide on suspension of trading, where necessary.

Appropriate disclosure

The technical means for appropriate public disclosure of inside information and its delay may be found in Article 2 of the implementing regulation. In terms of substance, not much has changed for issuers of financial instruments since the implementing regulation is based upon Article 21 of the 2004 Transparency Directive. Accordingly, for public disclosure of this information the issuers must use media which may be reasonably expected to publish this information. Distribution throughout Europe must also be ensured.

If the issuer operates a website, it must also provide the inside information on its website. To date, in accordance with the WpAIV it was necessary to provide the information for a period of at least one month on a web page which could easily be found from the main page and was listed under a relevant and clearly worded section heading. The Market Abuse Regulation now requires the inside information to remain on the website for a period of five years. The implementing regulation also prescribes that inside information must be available free-of-charge and must be easy to find. The inside information must also indicate the time and date of public disclosure. The information must be posted on the website in chronological order.

Transmission to the company register

Immediately after – but never before – public disclosure, the inside information must be transmitted to the company register.

However, this obligation only applies for MTF issuers if this is prescribed in their national legislation. In Germany, this obligation does apply (section 15 (1) of WpHG). In cases where this obligation does not apply, MTF issuers may voluntarily transmit the inside information to the officially established storage mechanism which corresponds to the company register.

Competent authority

In Germany, BaFin is responsible for monitoring the ad hoc obligations of domestic and MTF issuers within the meaning of section 2 (7) and (7a) of the WpHG.

In relation to exemption notices, the Delegated Regulation prescribes that in case of equity securities as a rule the authority of the Member State in which the issuer is registered will be competent. If the issuer does not have any financial instruments admitted to trading in the Member State in which it has its registered office or if these instruments are traded without its consent and it has not applied for admission to trading, the authority of the state in which these financial instruments are traded with the issuer’s consent or in which the issuer has first applied for admission to trading on a trading venue for these financial instruments or has already been admitted to trading shall be competent.

Legal consequences in case of a violation

Violations of the ad hoc disclosure obligation will constitute an administrative offence and are punishable with a fine of up to EUR 1 million. The cases in which fines may be imposed and the framework for fines are prescribed in section 39 of the new WpHG.