MKT 7. MKT 7. MARKET DISCLOSURE
MKT 7.1 MKT 7.1 Application
MKT 7.1.1 MKT 7.1.1(1) This chapter applies, subject to (2), to every Reporting Entity other than that of a Listed Fund.(2) The requirements in this section do not apply to a Reporting Entity if the relevant market disclosure has already been made in relation to the Financial Instruments either by another Person or in relation to other Financial Instruments.
Guidance1. The market disclosure requirements applicable to Listed Funds are in chapter 3.2. This chapter sets out the obligations of Reporting Entities to disclose and control information in order to protect actual and potential investors and to maintain a fair, informed and orderly market in Financial Instruments. This chapter also sets out the limited circumstances under which a Reporting Entity may selectively disclose Inside Information, delay public disclosure and control access to such information in order to limit the potential Market Abuse.3. The Regulator recognises the importance to the market of accurate, up-to-date information about Reporting Entities. Reporting Entities are therefore required to disseminate Inside Information as soon as possible. Where these obligations are not met and the Regulator considers it appropriate, the Regulator may seek one or more sanctions as specified in Part 11 of the FSMR.
MKT 7.2 MKT 7.2 Disclosure of Inside Information
MKT 7.2.1 MKT 7.2.1(1) A Reporting Entity must make timely disclosure of Inside Information in accordance with the requirements in this section.(2) A Reporting Entity must ensure that the disclosure it makes pursuant to (1) is not false, misleading, or deceptive and does not omit anything likely to affect the import of the information. Any false, misleading, or deceptive representations would lead to the imposition of civil liability in accordance with section 70 of the FSMR.
Guidance1. A Reporting Entity is required to disclose Inside Information as soon as possible. In practice, a short period before announcing Inside Information is permitted where a Reporting Entity is affected by an unexpected event and the Reporting Entity needs to clarify the situation or take legal advice so that any information released is accurate and not false, misleading, or deceptive. Any delay should be limited to a period no longer than is reasonably necessary in the circumstances. Where there is a danger of the information leaking out in the meantime, the Reporting Entity should make a holding announcement giving an outline of the subject matter of the announcement, the reasons why a full announcement cannot yet be made and undertaking to make a full announcement as soon as possible.2. For the disclosure to be not false, misleading, or deceptive, a Reporting Entity should provide information that is accurate, factual and complete. Any incomplete or inaccurate information, such as omission of relevant information, would be false, misleading, or deceptive. Information should be provided in an easy to understand manner and not for promotional purposes. The use of imprecise and confusing language such as "double digit" or "in excess of last year" should be avoided as it does not allow investors to properly assess the information for the purpose of making an informed decision relating to the relevant Financial Instruments.3. Where a Reporting Entity realises that it has or may have breached its continuous disclosure obligations, it should contact the Regulator to discuss the matter and seek guidance on remedying the situation and on taking steps to ensure that similar breaches are prevented from recurring.4. A confidentiality agreement cannot prevent an entity from complying with its obligations relating to the disclosure of Inside Information.5. If, for any reason, a Reporting Entity is unable, or unwilling to make a holding announcement it may be appropriate for the Reporting Entity to file a report pursuant to Rule 7.2.5 and for the trading of its Financial Instruments to be suspended until the Issuer is in a position to make an announcement.
Identifying Inside Information6. Inside Information is defined in sections 95(2), (3) and (4) of the FSMR as:(2) "In relation to Financial Instruments, or Related Instruments, which are not Commodity Derivatives, Inside Information is information of a Precise nature which:(a) is not generally available;(b) relates, directly or indirectly, to one or more Issuers of the Financial Instruments or to one or more of the Financial Instruments; and(c) would, if generally available, be likely to have a significant effect on the price of the Financial Instruments or on the price of Related Instruments.(3) In relation to Financial Instruments or Related Instruments which are Commodity Derivatives, Inside Information is information of a Precise nature which—(a) is not generally available;(b) relates, directly or indirectly, to one or more such derivatives; and(c) users of markets on which the derivatives are traded would expect to receive in accordance with any Accepted Market Practices on those markets.(4) In relation to a person charged with the execution of orders concerning any Financial Instruments or Related Instruments, Inside Information includes information conveyed by a Client and related to the Client's pending orders which—(a) is of a Precise nature;(b) is not generally available;(c) relates, directly or indirectly, to one or more Issuers of Financial Instruments or to one or more Financial Instruments; and(d) would, if generally available, be likely to have a significant effect on the price of those Financial Instruments or the price of Related Instruments."7. In accordance with section 95(5) of the FSMR, information is considered "Precise" if it:a. "indicates circumstances that exist or may reasonably be expected to come into existence or an event that has occurred or may reasonably be expected to occur; andb. is specific enough to enable a conclusion to be drawn as to the possible effect of those circumstances or that event on the price of Financial Instruments or Related Instruments."8. Similarly, information would be likely to have a "significant effect on price" if and only if it is information of that kind which a reasonable investor would be likely to use as part of the basis of his investment decisions.9. The Reporting Entity is itself best placed to determine whether information, if made public, is likely to have a significant effect on the price of the relevant Financial Instruments, as what constitutes Inside Information will vary widely according to circumstances.
Financial forecasts and expectations10. Where a Reporting Entity makes a market announcement which includes a profit or revenue forecast, such forecasts become, as soon as made, factored into the market pricing of the relevant Financial Instruments. If the Reporting Entity becomes aware that there is likely to be a material difference between the forecast and the true outcome, the Reporting Entity should make an announcement correcting the forecast as soon as possible so that the market pricing reflects the accurate position.11. In relation to financial forecasts published by a Reporting Entity, the Regulator considers that circumstances giving rise to a variation from the previous one should generally be considered Inside Information and should be disclosed by the Reporting Entity as soon as possible. Even where a Reporting Entity has not made a previous forecast, circumstances giving rise to a variation of profit or revenue from the previous corresponding reporting period should be disclosed where such circumstances would have a significant effect on the price of relevant Financial Instruments. Generally, a variation of 10% or more should be disclosed, but in some circumstances, a smaller variation may also be disclosable if it would reasonably be considered to have a significant effect on the price of the relevant Financial Instruments.12. In making such disclosure, the Reporting Entity should provide clear details of the extent of the variation. For example, a Reporting Entity may indicate that, based on management accounts, its expected net profit will be an approximate amount (e.g. approximately $15 million) or alternatively within a stated range (e.g. between $14m and $16m). Alternatively, a Reporting Entity may indicate an approximate percentage movement (e.g. up or down by 35%).
Relationship between continuous disclosure and periodic disclosures13. Periodic disclosures by Reporting Entities are required in a number of circumstances, and examples can include interim and annual financial reports and accounts, prospectuses, bidder's statements and target's statements.14. In the course of preparing these disclosure documents, Reporting Entities may become aware of Inside Information which was previously insufficiently Precise to warrant disclosure. In such circumstances, a Reporting Entity should not defer releasing that information until the periodic disclosure or other document is finalised. In such circumstances, a Reporting Entity is expected to make an announcement containing the Inside Information as soon as possible.
Financial Instruments of the same class admitted to trading in more than one jurisdiction15. Reporting Entities with Financial Instruments of the same class admitted to trading in more than one jurisdiction should ensure that the release of announcements containing Inside Information is co-ordinated across jurisdictions. If the requirements for disclosure are stricter in another jurisdiction than in the ADGM, the Reporting Entity must ensure that the same information is released in the ADGM as in that other jurisdiction.16. Reporting Entities should not delay an announcement in the ADGM in order to wait for a market to open in another jurisdiction.
A Reporting Entity may delay market disclosure of Inside Information so as not to prejudice its legitimate interests provided that:(1) the delay is not likely to mislead the markets; and(2) if the information is to be selectively disclosed to a Person prior to market disclosure, it is made in accordance with the requirements in Rule 7.2.3.
MKT 7.2.3 MKT 7.2.3(1) For the purposes of Rule 7.2.2(2), a Reporting Entity may selectively disclose Inside Information to a Person prior to making market disclosure of such information only if:(a) it is for the purposes of the exercise by such a Person of his employment, profession or duties;(b) that Person owes to the Reporting Entity a duty of confidentiality, whether based on law, contract or otherwise; and(c) the Reporting Entity has provided to that Person, except where that Person is the Regulator, a written notice as specified in (3).(2) For the purposes of (1)(a), the Persons whose exercise of employment, profession or duties may warrant selective disclosure are as follows:(a) any adviser, underwriter, Sponsor or compliance adviser;(b) an agent employed by the Reporting Entity to release the information;(c) Persons with whom the Reporting Entity is negotiating with a view to effecting a transaction or raising finance, including prospective underwriters or Sponsors of an issue of Financial Instruments, providers of finance or loans or the placement of the balance of a rights issue not taken up by Shareholders;(d) the Regulator or another regulator where such disclosure is necessary or desirable for the regulator to perform its functions;(e) a Person to whom the Reporting Entity discloses information in accordance with a lawful requirement;(f) a major Shareholder of the Reporting Entity; or(g) any other Person to whom it is necessary to disclose the information in the ordinary course of business of the Reporting Entity.(3) For the purposes of (1)(c), the Reporting Entity must, before making disclosure to a Person, provide to that Person a written notice that:(a) the information is provided in confidence and must not be used or be allowed to be used for a purpose other than the purpose for which it is provided; and(b) the recipient must take reasonable steps to ensure that the recipient or any Person having access to the information through the recipient does not deal in the relevant Financial Instruments, or any other related investment, or disclose such information without legitimate reason, prior to market disclosure of that information by the Reporting Entity.(4) Where a Reporting Entity makes selective disclosure of Inside Information pursuant to (1), it must ensure that a full announcement is made to the market as soon as possible, and in any event, when it becomes aware or has reasonable grounds to suspect that such information has or may have come to the knowledge of any Person or Persons other than those to whom the selective disclosure was made.
Guidance1. It is likely that Inside Information will be made known to certain Employees of the Reporting Entity. A Reporting Entity should put in place procedures to ensure that Employees do not disclose such information, whether or not inadvertently, and that Employees are adequately trained in the identification and handling of Inside Information (see Rules 7.2.6 – 7.2.7 and associated Guidance).2. Rule 7.2.3 does not excuse a Reporting Entity from its overriding obligation to disclose Inside Information as soon as possible pursuant to Rule 7.2.1. A Reporting Entity which proposes to delay public disclosure of Inside Information should refer to Rule 7.2.4, which sets out the limited disclosure exceptions permitted.
MKT 7.2.4(1) A Reporting Entity need not, subject to (2), make disclosure of information pursuant to Rule 7.2.1, where, in the reasonable opinion of the Reporting Entity, the disclosure required by that Rule would:(a) be unduly detrimental to the legitimate interests of the Reporting Entity; or(b) disclose commercially sensitive material; or(c) result in a Contravention of any rule of ADGM.(2) Where a Reporting Entity intends not to make the disclosure pursuant to (1), it must immediately file with the Regulator a confidential report which:(a) contains all the information which it seeks not to disclose and the reasons for non-disclosure; and(b) is in the English language and, where any documents accompanying the report are not in the English language, an English translation of such documents.(3) The Regulator may:(a) specify the period during which disclosure of the information included in the confidential report need not be disclosed to the markets; and(b) extend the period referred to in (a) upon application by the Reporting Entity.(4) Where a confidential report is filed with the Regulator under (2), the Reporting Entity need not comply with the requirements in Rule 7.2.1 during the period permitted by the Regulator pursuant to (3), unless or until one of the following occurs:(a) the Regulator directs the Reporting Entity to comply with Rule 7.2.1;(b) the Reporting Entity becomes aware that there is a material change of circumstances that renders the reason for non-disclosure of the information no longer valid; or(c) the Reporting Entity becomes aware or has reasonable grounds to suspect that the relevant Inside Information has or may have come to the knowledge of any Person or Persons other than by way of selective disclosure in accordance with Rule 7.2.3.(5) The procedures in Part 17 of the FSMR apply to a decision of the Regulator under (3) or (4)(a).
MKT 7.2.5 MKT 7.2.5
By filing a report under Rule 7.2.4, the Reporting Entity undertakes that the contents of the report and any accompanying documents are true, accurate and not false, misleading, or deceptive and contain all the information which the Regulator would reasonably expect to be made aware of in the circumstances of the case.
Guidance1. Examples of circumstances under which a Reporting Entity might rely on the exception from disclosure in Rule 7.2.4 include where:a. it would be a breach of law to disclose such information;b. the information is a trade secret;c. there are negotiations in course where the outcome or normal pattern of those negotiations would be likely to be affected by public disclosure;d. the information is provisional and generated for internal management purposes prior to later public disclosure; ore. there are impending developments that could be jeopardised by premature disclosure.2. Rule 7.2.4 does not permit a Reporting Entity to delay public disclosure of the fact that it is in financial difficulty or of its worsening financial condition and is limited to the fact or substance of the negotiations to deal with such a situation. A Reporting Entity is also not permitted to delay disclosure of Inside Information on the basis that its position in subsequent negotiations to deal with the situation will be jeopardised by the disclosure of its financial condition.3. Where the Regulator considers that the reliance on permitted exceptions under Rule 7.2.4 is not in the interests of actual or potential investors, market integrity or the ADGM, it may direct the Reporting Entity to make either a holding announcement or full market disclosure (see Rule 7.5.1). The Regulator may, in addition, require the Recognised Body in which the Financial Instruments are traded to suspend trading of the relevant Financial Instruments.
Control of Inside Information
A Reporting Entity must establish effective arrangements to deny access to Inside Information to Persons other than those who require it for the exercise of their functions within the Reporting Entity.
A Reporting Entity must establish and maintain adequate systems and controls to enable it to identify at all times any Person working for it under a contract of employment or otherwise, who has or may reasonably be likely to have access to Inside Information relating to the Reporting Entity, whether on a regular or occasional basis.
A Reporting Entity must take the necessary measures to ensure that its Directors and Employees who have or may have access to Inside Information acknowledge the legal and regulatory duties entailed, including dealing restrictions in relation to the Reporting Entity's Financial Instruments or any related investments, and are aware of the sanctions attaching to the misuse or improper use or circulation of such information.
MKT 7.2.9 MKT 7.2.9
A Reporting Entity must nominate two individuals to be its main points of contact with the Regulator in relation to continuing disclosure and other obligations under this chapter.
Framework for handling Inside Information1. The responsibility for ensuring that a Reporting Entity has an adequate overall policy on the handling of Inside Information lies with the Board of the Reporting Entity. Whilst responsibility for compliance with the continuing obligations set out in these Rules lies with the Reporting Entity, Directors should be aware that they may be held personally liable for breaching these Rules.2. Reporting Entities should have a consistent procedure for assessing whether information is Inside Information and should clearly identify those within the Reporting Entity who are responsible for the communication of this information to the market.3. Reporting Entities should put in place arrangements for maintaining the confidentiality of Inside Information before announcement. These should include adequate training for Employees in the handling, distribution and announcement of Inside Information as appropriate. Reporting Entities should, for example, guard against the risk of Inside Information being leaked to the market through selective disclosure of internal briefings or via trade journals. Where the Reporting Entity considers that this may have occurred, an announcement should be made immediately.
Inadvertent disclosure4. In situations where the Reporting Entity will be open to questioning that may be designed to elicit or may have the effect of eliciting Inside Information (such as during Shareholders' meetings or dealing with analysts or journalists), the Reporting Entity should plan in advance how it will respond to such questions. If the Reporting Entity intends to disclose Inside Information at such a meeting, an announcement must be made before or at the same time as the meeting.
MKT 7.3 MKT 7.3 Disclosure of interests by Connected Persons
Section 76 of the FSMR requires certain persons connected to a Reporting Entity to make certain disclosures to the Regulator and the Reporting Entity in accordance with the requirements prescribed in these Rules.
MKT 7.3.1 MKT 7.3.1
This Rule applies to a Connected Person of a Reporting Entity other than that of a Listed Fund.
Chapter 3 contains Connected Person disclosure requirements relevant to Listed Funds.
MKT 7.3.2(1) For the purposes of section 76 of the FSMR, a Person is hereby prescribed as a Connected Person of a Reporting Entity if that Person:(a) is a Director or an individual involved in the Senior Management of either:(i) the Reporting Entity; or(ii) a Controller of the Reporting Entity; or(b) owns, whether legally or beneficially, or controls, whether directly or indirectly, voting Securities carrying more than 5% of the voting rights attaching to all the voting Securities of either:(i) the Reporting Entity; or(ii) a Controller of the Reporting Entity.(2) In (1), a Person is a Controller of a Reporting Entity if that Person (the first person), either alone or with his Associates, controls the majority of the voting rights in, or the right to appoint or remove the majority of the Board of, the Reporting Entity or any Person who has similar control over the first person, including an ultimate Controller of the first person.(3) For the purposes of determining whether a Person:(a) owns or controls voting Securities in (1)(b); or(b) controls the voting rights in or the right to appoint or remove the majority of the Board of a Reporting Entity or a Controller of a Reporting Entity in (2),any Securities held by that Person and his Associates, including those in which that Person or an Associate of that Person has a beneficial interest, are deemed as his Securities except as specified in (3).(4) For the purposes of (3), Securities are not deemed as his Securities where:(a) any such Securities are held by that Person on behalf of another Person who is not an Associate of that Person; and(b) the Person does not have control over the voting rights attaching to the Securities because some other Person exercises those rights or manages those Securities on a discretionary basis.(5) A Person is not a Connected Person of a Reporting Entity merely by reason that:(a) its Structured Products are admitted to trading on a Recognised Body; or(b) such Person:(i) owns or holds voting Securities solely in its capacity as trustee, nominee or custodian under an agreement to hold such Securities; and(ii) does not exercise any voting or other rights associated with the Securities except in accordance with the express instructions of the owner of the Securities or in accordance with the agreement in (i).
Events that trigger a disclosure
MKT 7.3.4 MKT 7.3.4
A disclosure made by a Connected Person must contain the following information:(1) the name and address of the Connected Person;(2) the date on which the event giving rise to the obligation to make the Disclosure occurred;(3) the date on which the filing was made; and(4) the price, amount and class of Securities or other investments as is relevant in relation to the transaction or other event and the previous and new level of interest held.
MKT 7.3.3(1) A Connected Person must make the disclosures required under section 76 (the "Disclosure") with the Regulator and the Reporting Entity within five Business Days of the occurrence of any of the events prescribed in (2) and (3).(2) In the case of a Person who is a Connected Person under Rule 7.3.2(1)(a), that Person must make the Disclosure:(a) upon becoming or ceasing to be a Director of a Controller of the Reporting Entity;(b) upon acquiring or ceasing to hold either alone or with an Associate of the Person any Securities or other investments in or relating to the Reporting Entity or a Controller of the Reporting Entity; and(c) upon an increase or decrease of at least 1% of the level of interest previously reported pursuant to (b).(3) In the case of a Person who is a Connected Person under Rule 7.3.2(1)(b), that Person must make the Disclosure:(a) upon acquiring or ceasing to hold voting Securities carrying more than 5% of the voting rights attaching to all voting Securities of either the Reporting Entity or a Controller of the Reporting Entity; and(b) upon an increase or decrease of at least 1% of the level of interest previously reported pursuant to (a).
Content of the disclosure
Upon a Connected Person making a disclosure to the Reporting Entity, the Reporting Entity must, as soon as possible, make market disclosure of that information in accordance with Rule 7.7.1.
Upon a Connected Person making a disclosure to the Reporting Entity, the Reporting Entity must, as soon as possible, make market disclosure of that information in accordance with Rule 7.7.1.
MKT 7.4 MKT 7.4 Disclosure of Directors' notifiable interests
Persons with a notifiable interest in the Reporting Entity are required to give a notice relating to that interest in accordance with the requirements prescribed in these Rules.
MKT 7.4.1 MKT 7.4.1
This section applies to every Reporting Entity other than that of a Listed Fund.
Chapter 3 contains the disclosure of notifiable interest applicable to a Listed Fund.
Definition of a notifiable interest
A Director of a Reporting Entity has a notifiable interest in the Reporting Entity if that person has any interest arising through:(1) the direct or indirect ownership of, or beneficial ownership of, investments in the Reporting Entity; or(2) any involvement in financial or commercial arrangement with or relating to the Reporting Entity.
Content and procedures relating to the notice
MKT 7.4.3(1) Subject to (2), a notice relating to a notifiable interest must be given by a Person referred to in Rule 7.4.2, to the other Directors of the Reporting Entity within five Business Days of the notifiable interest arising or changing.(2) A Person referred to in (1) need not give a notice relating to a notifiable interest if the notifiable interest is required to be included in a report which that Person must provide by virtue of being a Connected Person under Rule 7.3 and the Person has complied with the requirement mentioned in that Rule.(3) A notice relating to a notifiable interest must contain:(a) the name and address of the Person giving the notice; and(b) the details relating to the notifiable interest, including the date on which the notifiable interest arose or changed.
Upon receiving a notice relating to a notifiable interest, the Reporting Entity must, as soon as possible, make market disclosure of that report in accordance with Rule 7.7.1.
MKT 7.5 MKT 7.5 Power to direct disclosure
Section 199 of the FSMR gives the Regulator the power to direct a Reporting Entity to disclose specified information to the market or take such other steps as the Regulator considers appropriate where it is satisfied that it is in the interest of the ADGM to do so.
MKT 7.5.1(1) The Regulator may, pursuant to its power under section 199(1) of the FSMR, issue a written notice directing a Reporting Entity (a "Direction Notice") to disclose specified information to the market and to take any other steps as the Regulator considers appropriate in the following circumstances:(a) where a Reporting Entity fails to comply with an obligation to disclose any information under the FSMR and these Rules;(b) to correct or prevent a false market if the Regulator reasonably considers that there is or is likely to be a false market in a Reporting Entity's Securities;(c) where there is a rumour or media speculation in relation to the Reporting Entity or the Relevant Securities that has not been confirmed or clarified by an announcement by the Reporting Entity made in accordance with Rule 7.2.1 and such rumour or media speculation is or is reasonably likely to have an impact upon the price of the Reporting Entity or the Relevant Securities; or(d) where it is in the interests of:(i) actual or potential investors;(ii) market integrity; or(iii) the ADGM.(2) A Reporting Entity which receives a Direction Notice issued pursuant to (1) must comply with the terms of that notice.
MKT 7.6 MKT 7.6 Other matters that require market disclosure
MKT 7.7 MKT 7.7 Manner of market disclosure
MKT 7.7.1(1) When a Reporting Entity is required to make market disclosure of any information, such information must be released to the market by way of an announcement made:(a) to the Recognised Body on which the Securities are admitted to trading;(b) on the website of the Reporting Entity; and(c) to any approved regulatory announcement service.(2) The disclosure in (1) must also be concurrently provided to the Regulator.(3) Without prejudice to its obligations relating to market disclosure, a Reporting Entity must take reasonable care to ensure that any information it is required to disclose is clear, fair, and not false, misleading, or deceptive.
The Regulator may, upon application by a Person or on its own initiative, approve a regulatory announcement service for the purposes of making the Disclosure in 7.7.1.
A Reporting Entity must retain on its website all information that has been disclosed to markets for a period of one year following publication.