New rules on market abuse coming into force
We are rapidly approaching the date of 3 July 2016 when the new Market Abuse Regulation will enter into force. With less than three weeks to go before its commencement, all relevant parts of the legislation are not yet in place and a large number of unclarified issues are still outstanding. Plesner provides an overview below of the current status.
Amendments to the Danish Securities Trading etc Act and relevant executive ordersOn 3 June 2016, the Danish Parliament adopted proposed amendments to, among others, the Danish Securities Trading etc Act and the Danish Criminal Code that contained the amendments required by the commencement of the Market Abuse Regulation (MAR) on 3 July 2016.
The amendments to the Danish Securities Trading etc Act and the Danish Criminal Code consist primarily of legislative drafting and they adapt Danish law in such a way that the prohibitions and obligations that will be governed by MAR have been deleted and the necessary statutory authority for sanctions under Danish law has been introduced.
Some of the amendments from the Danish Securities Trading etc Act are the deletion of the provisions on issuers' regular duty of information, insider trading, price manipulation, disclosure of inside information and investment recommendations as such issues will now be governed by MAR. The provisions on punishment and sentencing of the Danish Securities Trading etc Act and the Danish Criminal Code will be adjusted to the new regulatory system under MAR. The internal rules requirement will also be abolished.
The amendments enter into force on 3 July 2016 when the Market Abuse Regulation also comes directly into force in Denmark.
As a consequence of the above amendments to acts, the Danish Executive Order on Market Abuse as well as the Danish Executive Order on the Drafting and Dissemination to the Public of Certain Investment Analyses will be repealed with effect from 3 July 2016. On the same day, a new executive order will enter into force and its only object is to increase the minimum threshold in MAR for registering managers' transactions from EUR 5,000 to EUR 20,000.
New Nasdaq rules
As a consequence of MAR, Nasdaq Copenhagen has revised the sets of rules applying to issuers of shares and issuers of bonds. The joint set of rules applying to issuers of securities admitted to trading on First North has also been amended. The amended sets of rules enter into force on 3 July 2016.
The object of Nasdaq's updating of the sets of rules is primarily to harmonise Nasdaq's rules with the MAR system, including harmonising the terminology in Nasdaq's rules with the wording of MAR.
Before the publication of the updated sets of rules, it has been of particular interest whether Nasdaq will still demand that issuers of shares must have internal rules for trading in the company's shares. In the new set of rules for issuers of shares, the requirement is amended to the recommendation that the issuer drafts internal rules on trading with the issuer's own financial instruments and managers' trade in the issuer's financial instruments. Even if MAR contains new rules on closed trading periods of 30 calendar days before the announcement of a preliminary announcement of financial statements (or alternatively the annual report if no preliminary announcement of financial statements is issued) and the interim financial report, Nasdaq recommends that issuers contemplate whether a longer closing period than the closing period fixed in MAR is relevant in the specific situation or if, for example, it will be more relevant for the individual issuer to operate with open trading windows as is known today.
Nasdaq's regular duty of information has also been adjusted and it is now in complete accordance with MAR which was not the case before when it was unclear whether Nasdaq's rules stipulated more obligations than the Danish Securities Trading etc Act.
The status of EU law and EU guidelines
The majority of the detailed parts of EU law issued in connection with MAR have by now become available, either finally or in a version accepted by the European Commission. But the final, and in practice important, regulation containing the "implementing technical standards" to determine the requirements as to the contents of the explanation in connection with a delayed disclosure of inside information is not yet available. The European Commission has announced, however, that the Commission will adopt the draft prepared by ESMA after some technical amendments have been made.
ESMA also still needs to publish its final guidelines for the definition of an issuer's legitimate interests which will delay the publication of inside information and in which situations delayed publication of inside information will probably mislead the public. It is expected that the guidelines will only be made public after the commencement of MAR (in the third quarter of 2016).
ESMA has also issued the first edition of their future Q&A on MAR. But for the present the document only contains the answer to one question.
Overview and feature site
Plesner has previously prepared an overview of the most important changes for Danish issuers as a result of MAR. The overview is part of our MAR feature site, which provides an overview of the most important documents from the EU and the Danish authorities. The feature site contains links to material to which reference is made above.
Overview of the most important changes for Danish issuers as a result of MAR (in Danish)
MAR feature site