Proposed Changes to the Rules on Delaying Disclosure of Inside Information
By Ronan O'Sullivan, Matthew Poxon & David Prowse
The FCA is currently consulting on changes to the Disclosure and Transparency Rules relating to delaying disclosure of inside information.
The FCA has launched a consultation on the proposal to amend DTR 2.5, which provides guidance on when the legitimate interests of a company would allow it to delay the disclosure of inside information. The proposal is to delete the last sentence of DTR 2.5.5G, which significantly restricts the circumstances in which a company may be allowed to delay disclosure.
The proposed changes have arisen as a result of recent developments in relation to the disclosure of inside information. It has been noted that the definition of inside information has been interpreted with increasing breadth in cases both in the UK and the EU. At the same time, the restrictions on delaying disclosure in DTR 2.5.5 G go beyond the EU market abuse requirements. As a result, companies face increased uncertainty on when a delay in disclosure can be justified, which can result in the premature disclosure of information in circumstances where the information was not sufficiently informed and there is little benefit to the market.
By making the change proposed, the FCA is seeking to promote its primary aims of transparency and the proper functioning of the markets. Unfortunately, the FCA is not currently proposing to issue additional guidance on what constitutes legitimate interests on the basis that guidelines and standards in this area are provided by European Securities and Markets Authority. The consultation document does however make clear that when deciding whether a company’s legitimate interests will be prejudiced by disclosure, no regard should be had to commercial or PR preferences. Furthermore, the FCA is of the view that the protection of the price of a relevant security is not a legitimate interest.
It should be noted that this consultation is running alongside the FCA’s consultation on the implementation of the Market Abuse Regulations, which are expected to be implemented in July 2016 in order to bring the UK into line with the EU position on market abuse. The implementation of these regulations will repeal and replace the current statutory definition of “inside information” as well as various parts of the DTR.
The consultation on delaying disclosure is open for comment until 20 February 2016.