MAR 1.4 Misuse of information

Information is treated as generally available if it can be obtained by research or analysis conducted by or on behalf of users of a market (section 118(7) of the Act). In addition, information is to be regarded as generally available where one (or more) of the following is satisfied:the information has been disclosed to a prescribed market through an accepted channel for dissemination of information or otherwise under the rules of that market;

1. (1)

   the information has been disclosed to a prescribed market through an accepted channel for dissemination of information or otherwise under the rules of that market;

2. (2)

   the information is contained in records which are open to inspection by the public;

3. (3)

   the information has otherwise been made public, including through the Internet, or some other publication, or is derived from information which has been made public;

4. (4)

   the information can be obtained by observation.

Whether, in a particular case, a particular piece of information would, or would be likely to, be regarded as relevant information by the regular user will depend on the circumstances of the case. In making such a determination, the regular user is likely to consider the extent to which:

1. (1)

   the information is specific and precise;

2. (2)

   the information is material;

3. (3)

   the information is current;

4. (4)

   the information is reliable, including how near the person providing the information is, or appears to be, to the original source of that information and the reliability of that source;

5. (5)

   there is other material information which is already generally available to inform users of the market; and

6. (6)

   the information differs from information which is generally available and can therefore be said to be new or fresh information.

In the case of information relating to possible future developments (which do not currently give rise to an expectation of disclosure (MAR 1.4.4 E (4)), the following additional factors are to be taken into account when determining the relevance of that information (see example in MAR 1.4.18 E):

1. (1)

   whether the information provides, with reasonable certainty, grounds to conclude that the possible future developments will, in fact, occur; and

2. (2)

   the significance those developments would assume for market users given their occurrence.

Examples of relevant information include the following:

1. (1)

   where the qualifying investment in question is issued by a company, or is a derivative relating to a qualifying investment issued by a company, information concerning the business affairs or prospects of the company or a related company;

2. (2)

   where the qualifying investment is a derivative relating to a commodity, information or events affecting the deliverable supply of the commodity, such as, for example, information as to the business operations of major suppliers; and

3. (3)

   information as to official statistics, and fiscal and monetary policy announcements before they are announced.

Information will only fall within MAR 1.4.4 E (4) if it is either:

1. (1)

   information which has to be disclosed in accordance with any legal or regulatory requirement (referred to as "disclosable information"); or

2. (2)

   information which is routinely the subject of a publicannouncement although not subject to any formal disclosure requirement (referred to as "announceable information").

In the case of information relating to possible future developments (MAR 1.4.4 E (4) and MAR 1.4.10 E), which may lead to a disclosure or an announcement being made, the following additional factor is to be taken into account when determining whether the information is to be treated as disclosable information or as announceable information, namely whether the information provides, with reasonable certainty, grounds to conclude that the possible future developments will, in fact, occur and accordingly that a disclosure or announcement will, in fact, be made (see example in MAR 1.4.18 E).

Examples of disclosable information include:

1. (1)

   information which is required to be disseminated under the Takeover Code or SARs on, or in relation to, qualifying investments traded on a prescribed market;

2. (2)

   information relating to officiallylisted securities which is required to be disclosed under the Listing Rules;

3. (3)

   information which is required to be disclosed to a prescribed market under the rules of an RIE.

Examples of announceable information include:

1. (1)

   information which is to be the subject of official announcement by governments, central monetary or fiscal authorities or regulatory body (financial or otherwise, including exchanges);

2. (2)

   changes to published credit ratings of companies whose securities are qualifying investments or relevant products; and

3. (3)

   changes to the constituents of a securities index, where the securities are qualifying investments or relevant products.

An example of behaviour which falls within MAR 1.4.4 E occurs where a persondeals, on a prescribed market, in the equities of XYZ plc, a commodity producer, based on information concerning that company which is not generally available, which is relevant information and which is disclosable or announceable information in relation to the equity market. If the information is also relevant information in relation to a commodity futures contract traded on a prescribed market, dealing in that futures contract based on the information will amount to market abuse only if the information is also disclosable or announceable in relation to the commodity futures market. More generally, where information is required to be disclosed to market A, dealing or arranging deals in qualifying investments traded on A, or in other related products, based on the information will amount to market abuse where this occurs prior to the disclosure being made. Where market A is an equity market, related products will include derivatives and other investments related to the equity in relation to which the disclosure is to be made. Where the information is also relevant to market B, dealing or arranging deals in relation to qualifying investments traded on market B, or in other related products, based on the information will only amount to market abuse where disclosure obligations exist in relation to market B.

An example of information which falls within MAR 1.4.4 E (4) arises in connection with the obligation of an officiallylisted company to announce any major new developments in its sphere of activity which may lead to substantial movement in the price of its listed securities. This could include, for example, entering into a significant contract with a major supplier. In that case, the obligation arises at the time of entering into the contract and disclosure is required to be made without delay. This falls within the category of information set out in MAR 1.4.4 E (3) and MAR 1.4.4 E (4). However, subject to meeting the tests in MAR 1.4.12 E, the information will fall within MAR 1.4.4 E (3) and MAR 1.4.4 E (4) at an earlier stage: namely at the time at which there are grounds to conclude, with reasonable certainty, that the contract will be entered into and that disclosure of the contract will have to be made. Any dealing based on that information in the securities (or investments related to the securities) at that earlier stage would amount to market abuse.

MAR 1.4.20 C, MAR 1.4.21 C, MAR 1.4.24 C, MAR 1.4.26 C, MAR 1.4.28 C and MAR 1.4.31 C each set out descriptions of behaviour that does not amount to market abuse in that the behaviour does not constitute a misuse of information (see MAR 1.4.4 E).1

It will be presumed for the purposes of MAR 1.4.21 C that the person's possession of the information in question did not influence his decision to deal or arrangedeals if:

1. (1)

   the person had taken a firm decision to deal or arrange deals before the relevant information was in the person's possession; and

2. (2)

   the terms on which the person had proposed to enter into the transaction(s) did not alter after the receipt of the information.

Where a person is an organisation and where one or more individuals within the organisation are in possession of relevant information, it will be presumed for the purposes of MAR 1.4.21 C that such possession had no influence on the person's decision to deal or arrange deals if none of the individuals in possession of the information:

1. (1)

   had any involvement in the decision to engage in the dealing or arranging; or

2. (2)

   behaved in such a way as to influence, directly or indirectly, the decision to engage in the dealing or arranging; or

3. (3)

   had any contact with those who were involved in the decision to engage in the dealing or arranging whereby the information could have been transmitted.

For example, in the context of a takeover bid the following instances of dealing or arranging deals will fall within MAR 1.4.28 C:1

1. (1)

   seeking from holders of securities irrevocable undertakings or expressions of support to accept an offer to acquire those securities (or not to accept such an offer);

2. (2)

   making arrangements in connection with an issue of securities where those securities are to be offered as consideration for the takeover offer or to be issued in order to fund the takeover offer, including making arrangements for the underwriting or placing of those securities and any associated hedging arrangements by underwriters or placees;

3. (3)

   making arrangements to offer cash as consideration for the takeover offer as an alternative to securities consideration.

A person should not be prevented from acquiring an equitystake in a company with a view to pursuing a takeover bid or engaging in other forms of market operations simply because he knew that he would be making a bid, and the knowledge amounted to relevant information. For example, a bidder (including a potential bidder), and those who act for him and his associates, may deal in the target company's shares for the purpose of building a stake in the target company or take other steps in connection with a proposed takeover, such as seeking irrevocable undertakings from shareholders or making arrangements for an issue of consideration shares. However, this does not mean that a bidder may undertake any other type of transaction in the target company's shares, or in other investments (for example, contracts for differences or securities of other companies) in relation to which the information is relevant information. For example, a bidder will be engaging in market abuse if he enters into transactions in qualifying investments that provide merely an economic exposure to movements in the price of the target company's shares. Similarly, those who act for the bidder will engage in market abuse if they deal for their own benefit in qualifying investments or relevant products in respect of which information concerning the proposed bid is relevant information. (See MAR 1.8.3 G, MAR 1.8.7 G (2) and MAR 1.8.8 G.)1