|Callaghan Kennedy||Jacqueline Diamond|
The 2014 EU Regulation on Market Abuse (MAR) and the 2014 EU Directive on Criminal Sanctions for Market Abuse (CSMAD) will come into force in EU member states, including Ireland, on July 3 2016. This will repeal and replace the current EU market abuse regime.
MAR will set out the revised market abuse framework, while CSMAD will stipulate the minimum sanctions that member states must impose for breaches of this framework. On and from July 3 2016, issuers of debt securities listed on EU organised trading facilities and multilateral trading facilities (such as the Global Exchange Market, or GEM, in Ireland) will, for the first time, be subject to the EU market abuse regime. Previously, this regime was only applicable to issuers with securities listed on regulated markets in the EU.
The new regime will continue to prohibit:
- engaging or attempting to engage in, or recommending or inducing another person to engage in, insider dealing;
- market manipulation and attempted market manipulation; and,
- unlawfully disclosing inside information.
The new regime will also impose additional obligations relating to:
- the disclosure of inside information, in particular the delay of any such disclosure;
- the preparation and maintenance of insider lists, in particular the form and content thereof; and,
- dealings by persons discharging managerial responsibilities and persons closely associated with them (together PDMRs).
All issuers of debt securities listed on the GEM, whether such listing is prior to, or after, July 3 2016 should:
- adopt policies and procedures relating to the treatment of inside information, including to ensure the immediate publication of inside information, and that any delay in the publication of inside information is in accordance with MAR and the confidentiality of inside information pre-disclosure is preserved;
- draw up and maintain, in the prescribed form, insider lists of persons working for it with access to inside information;
- adopt policies and procedures relating to the disclosure of transactions by PDMRs in financial instruments within the appropriate timeframe and restricting dealings by PDMRs during the relevant closed periods;
- draw up and maintain a list of PDMRs; and,
- ensure that employees, directors and other PDMRs are aware of their obligations under the new market abuse regime and the relevant sanctions for non-compliance thereunder.
Given the popularity of the GEM for listing collateralised loan obligation (CLO) transactions (including US-based transactions), such issuers will need to consider the application of these new requirements in relation to those transactions.
The Irish Stock Exchange is currently updating the GEM rules to reflect the new EU market abuse regime.
Callaghan Kennedy and Jacqueline Diamond