DTR 2.2 Disclosure of inside information

Information is inside information if each of the criteria in the definition of inside information is met.

1. (1)

   In determining the likely price significance of the information an issuer should assess whether the information in question would be likely to be used by a reasonable investor as part of the basis of his investment decisions and would therefore be likely to have a significant effect on the price of the issuer's financial instruments (the reasonable investor test). [Note: Article 1(2) 2003/124/EC]

2. (2)

   In determining whether information would be likely to have a significant effect on the price of financial instruments, an issuer should be mindful that there is no figure (percentage change or otherwise) that can be set for any issuer when determining what constitutes a significant effect on the price of the financial instruments as this will vary from issuer to issuer.

The reasonable investor test requires an issuer:

1. (1)

   to take into account that the significance of the information in question will vary widely from issuer to issuer, depending on a variety of factors such as the issuer's size, recent developments and the market sentiment about the issuer and the sector in which it operates; and

2. (2)

   to assume that a reasonable investor will make investment decisions relating to the relevant financial instrument to maximise his economic self interest.

It is not possible to prescribe how the reasonable investor test will apply in all possible situations. Any assessment should take into consideration the anticipated impact of the information in light of the totality of the issuer's activities, the reliability of the source of the information and other market variables likely to affect the relevant financial instrument in the given circumstances. However, information which is likely to be considered relevant to a reasonable investor's decision includes information which affects:

1. (1)

   the assets and liabilities of the issuer;

2. (2)

   the performance, or the expectation of the performance, of the issuer's business;

3. (3)

   the financial condition of the issuer;

4. (4)

   the course of the issuer's business;

5. (5)

   major new developments in the business of the issuer; or

6. (6)

   information previously disclosed to the market. [Note: Recital 1 2003/124/EC]

An issuer and its advisers are best placed to make an initial assessment of whether particular information amounts to inside information. The decision as to whether a piece of information is inside information may be finely balanced and the issuer (with the help of its advisers) will need to exercise its judgement.

The directors of the issuer should carefully and continuously monitor whether changes in the circumstances of the issuer are such that an announcement obligation has arisen under this chapter.

1. (1)

   Subject to the limited ability to delay release of inside information to the public provided by DTR 2.5.1 R, an issuer is required to notify, via a RIS, all inside information in its possession as soon as possible.

2. (2)

   If an issuer is faced with an unexpected and significant event, a short delay may be acceptable if it is necessary to clarify the situation. In such situations a holding announcement should be used where an issuer believes that there is a danger of inside information leaking before the facts and their impact can be confirmed. The holding announcement should:

   1. (a)

      detail as much of the subject matter as possible;

   2. (b)

      set out the reasons why a fuller announcement cannot be made; and

   3. (c)

      include an undertaking to announce further details as soon as possible.

3. (3)

   If an issuer is unable, or unwilling to make a holding announcement it may be appropriate for the trading of its financial instruments to be suspended until the issuer is in a position to make an announcement.

4. (4)

   An issuer that is in any doubt as to the timing of announcements required by this chapter should consult the FSA at the earliest opportunity.

The FSA is aware that many issuers provide unpublished information to third parties such as analysts, employees, credit rating agencies, finance providers and major shareholders, often in response to queries from such parties. The fact that information is unpublished does not in itself make it inside information. However, unpublished information which amounts to inside information is only permitted to be disclosed in accordance with the disclosure rules and an issuer must ensure that at all times it acts in compliance with this chapter.