The European Securities and Markets Authority (ESMA) has reminded issuers that any disclosure of inside information during a ‘pre-close call’ should be compliant with the Market Abuse Regulation (MAR).
Given assertions in the media that ‘pre-close’ calls are related to volatility in share prices, ESMA said issuers should only share non-inside information during these ‘pre-close calls’. Pre-close calls are communication sessions between an issuer and analysts who generate research, forecasts and recommendations related to the issuer’s financial instruments.
To address potential concerns related to pre-close calls, ESMA recommended good practices, including: Prior to a ‘pre-close call, carrying out an assessment of the information intended to disclose, making sure that it is not inside information; informing the public about the upcoming “pre-close calls” on the issuer’s website; and making the material and documents used simultaneously available on the issuer’s website.
Oliver Blower, CEO of VoxSmart, said: “It is all very well ESMA trying to keep everyone honest, but these are guidelines, not legislation. Clear rules and transparency are key to keeping our markets trustworthy and fair – and this is what most market participants want as well.
“The grey area is when exactly does activity of this nature become a disclosable event to the wider market? At the end of the day, if there is a suspiciously high share price immediately after an analyst call, any regulator is going to need to dig into not only the intricate details behind the trades, but also whether the bank in question provided the full and proper disclosures in a timely manner.”
Matt Smith, CEO at SteelEye, said: “ESMA’s statement is a stark reminder that without an emphasis on transparency during pre-close calls, a watchdog crackdown could well be on the horizon. Markets need to remain inclusive and democratic, ensuring everyone has the right to participate with equal knowledge and to make informed decisions. When a select few have unfair access to sensitive information, this of course influences the market – something regulators are evidently keeping a closer eye on.”
©Markets Media Europe 2024
