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Inside information
What are the defining characteristics of inside information under MAR?
Information of a precise nature, that has not been made public, relating to an issuer or financial instrument, which if made public would be likely to have a significant effect on the prices of the relevant instruments.
What does 'precise nature' mean under MAR?
A set of circumstances that exists or may reasonably be expected to come to exist, specific enough to permit a conclusion about the price effect — so ongoing merger negotiations can be inside information before a deal is signed.
What extra form of inside information applies to persons executing client orders?
Information conveyed by a client about their pending orders which, if made public, would significantly affect prices. Trading ahead of it is front-running — a form of insider dealing.
Which markets does MAR's inside information cover, and when is information 'made public'?
It covers all instruments including commodities, emission allowances and related derivatives. Information is 'made public' when it comes to investors' knowledge inside or outside the Republic, may be easily and legally obtained, or is in public archives.
Insider dealing
What constitutes insider dealing, and how do order amendments fit in?
Acquiring or disposing of instruments to which inside information relates, for one's own or a third party's account. It also captures the amendment or cancellation of a previously placed order once inside information is received and the change is based on it.
When is 'encouraging or inducing' (tipping) an offence, and who is liable?
When a person with inside information recommends another to trade. Both are liable — the tipper for recommending, and the recipient if they trade knowing, or having reason to know, the recommendation was based on inside information.
Which four categories of persons are deemed to possess inside information?
Members of the issuer's administrative/management/supervisory body; persons with a capital holding in the issuer; persons with professional access to the information; and persons who obtained it through criminal activity.
What is the only permitted use of inside information?
Undertaking the duties of one's own position (e.g. a lawyer advising on an M&A deal). The prohibition is on trading or tipping, not on legitimately possessing the information.
Name two legitimate behaviours carved out from the insider dealing prohibition.
Genuine market-making activity (a safe harbour so liquidity is preserved), and transactions satisfying a legal or regulatory obligation that arose before the person obtained the inside information.
When is disclosing inside information unlawful?
Whenever it is disclosed to another person, unless the disclosure is made in the normal course of the discloser's employment, profession or duties.
Market soundings
What is a market sounding, and who may conduct one?
Communicating information before announcing a transaction to gauge potential investors' interest and the conditions of a possible deal. It may be conducted by issuers, secondary offerors, emission-allowance market participants, or third parties acting on their behalf.
What must a discloser do before and around a market sounding?
Before disclosing: obtain the recipient's consent to receive inside information, inform them of the trading prohibition, and inform them of the confidentiality obligation. Records must be kept for 5 years, and recipients informed as soon as the information ceases to be inside information.
Issuer disclosure
When must an issuer disclose inside information that directly concerns it?
As soon as possible, in a manner enabling fast access and a complete, correct and timely assessment. There is no fixed deadline, but incomplete disclosure still violates MAR.
Under what cumulative conditions may an issuer delay disclosure of inside information?
Immediate disclosure would prejudice its legitimate interests (e.g. ongoing negotiations); the delay would not mislead the public; confidentiality can be ensured; and the competent authority consents. If confidentiality is broken (e.g. rumours circulate), it must disclose immediately.
What applies when an issuer intentionally discloses inside information to a third party in the normal course of business?
It must make simultaneous public disclosure to prevent selective leaking. For a non-intentional (accidental) disclosure, the standard is 'promptly'.
Insider lists
Who maintains the insider list, and what minimum data must it contain?
The issuer and any persons acting on its behalf. It must contain the identity of each insider, the reason for inclusion, the date they obtained the information, and the date the list was drawn up or updated.
When is an insider list updated, how long kept, and how is it provided?
Updated when a new person gains access, when a person loses access, or when the reason for inclusion changes. Retained for 5 years and provided to the competent authority on request (not periodically). Each insider must acknowledge their duties and sanctions in writing.
What insider-list exemption applies on an SME growth market?
Issuers need not maintain a formal continuous list, provided they take all reasonable steps to ensure insiders acknowledge their legal duties and can supply a list to the competent authority on request.
When is a 'closely associated person' treated as an insider?
Where they are, for example, a member of the same household as the insider for at least one year — a legally presumed close association regardless of family relationship.
Managers' transactions
When must a manager (PDMR) notify own-account transactions, and what is the threshold?
The issuer and competent authority must be notified within three business days. The obligation is triggered once total transactions in the calendar year exceed €5,000 (a competent authority may raise this to €20,000, notifying ESMA with justification).
What is the closed period for managers, and when may they trade within it?
Managers may not trade the issuer's instruments during a 30-day closed period before an interim or year-end announcement. Trading is allowed on a case-by-case basis in exceptional circumstances, such as severe financial difficulty.
Are pledges reportable, and what does the 31 January obligation cover?
Yes — a pledge (except in standard custody accounts) transfers economic exposure and is reportable like a purchase/sale. The 31 January annual report relates to persons with qualifying holdings — not the insider list, which is kept year-round and produced on request.
Market manipulation
What constitutes market manipulation under MAR?
Entering transactions or disseminating false/misleading information that gives false or misleading signals about supply, demand or price, or secures a price at an abnormal or artificial level. Genuine market-making is excluded.
Give two examples of manipulative conduct beyond ordinary trading.
Manipulating closing/opening prices (distorting benchmarks used by funds and derivatives), and 'pump and dump' — taking a position, then voicing biased opinions via media/social media without disclosing the conflict, to profit from the price move. Cornering a market to fix prices also qualifies.
Define momentum ignition, ping orders, and layering/spoofing.
Momentum ignition: entering orders to start/exacerbate a trend so others accelerate it, creating an exit opportunity. Ping orders: tiny orders to detect hidden liquidity. Layering/spoofing: placing orders away from the touch on one side to move the price, then executing on the other side and cancelling.
Surveillance & reporting
What must trading venue operators do, and where do suspicious reports go?
They must maintain effective arrangements to prevent and detect insider dealing and market manipulation (including attempts). Any person professionally arranging/executing transactions must file a suspicious transaction and order report (STOR) with their own national competent authority, which relays it to the venue's authority.
What is the timeline and review cycle for establishing an accepted market practice?
The competent authority must notify ESMA at least 3 months before the practice becomes active; ESMA issues an opinion within 2 months; and the practice is reviewed with a report to ESMA every 2 years. The criteria are qualitative (transparency, safeguards, liquidity) — not trading-volume thresholds.
What standards apply to investment recommendations and market-relevant statistics?
Investment recommendations must be presented objectively with any interests/conflicts disclosed; statistics and forecasts that may significantly affect markets must be disseminated objectively and transparently. Media disclosures are assessed considering press-freedom rules unless the person benefits from or intends to mislead the market.
Sanctions
What are MAR's maximum financial penalties by tier for natural and legal persons?
Top tier (insider dealing, unlawful disclosure, manipulation): €5m / €15m or 15% of turnover. Middle tier (prevention/detection, public disclosure failures): €1m / €2.5m or 2%. Lowest tier (insider lists, managers' transactions, recommendations): €500,000 / €1m.
What non-financial and profit-based measures may a competent authority impose under MAR?
Disgorgement of the profits gained or losses avoided; a public warning naming the person and the infringement ('name and shame'); a temporary ban from management functions; and a permanent ban for repeated infringements of the core prohibitions.