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.