‘A compliance officer will go to jail in 2016.’ This bold statement from a LinkedIn Pulse article by Nigel Farmer, a director at German, stock-listed company Software, made me think. I sincerely hope that won’t happen, but there is no doubt the new requirements under the Market Abuse Regulation (MAR), bring on new challenges. (Read the original article here)
Insider Lists for Everyone
Among the key MAR obligations are new requirements relating to insider lists. For companies listed on multilateral trading facilities (MTFs) such as the AIM, insider lists are a completely new obligation. For issuers listed on regulated markets, the new rules present major changes to former requirements.
For every insider project, a list must be kept of all people having access to insider information. It is no longer possible to simply name someone as a temporary insider for a defined time period without adding that person to all insider projects he or she is aware of.
Permanent Insider as Easy Solution?
It seems easy to label someone as permanent insider. But except for those in charge of the insider list there are no real permanent insiders. Indeed, the European Securities and Markets Authority (ESMA) states that ‘inclusion in the permanent insiders section implies that the insiders have access to all inside information at all times.’ But how many people in an organization actually fall into that category? For example, even CEOs are not always aware of insider-relevant HR discussions by the supervisory board.
What Are the New Requirements?
What do the actual new MAR requirements look like?
- First of all, issuers must also include extended personal information about their insiders, such as private phone numbers and national ID numbers.
- Secondly the exact time the insider information was identified and the time the person became aware of that specific information must also be recorded. Now it gets tricky. All times must be stated in Coordinated Universal Time. This means international corporations not only have to consider changes due to daylight saving time, but also different time zones.
If national authorities have previously sent few requests for insider lists, this does not mean efforts or vigilance can be minimized. ESMA underlines that ‘the lists should be kept up to date at all times and not only upon request from a competent authority.’
How do You Manage Your Insider Lists?
Every person on the insider list must acknowledge the legal and regulatory duties of being an insider and has to be aware of potential sanctions. So how do you manage your insider lists? For companies of a certain size, it will be difficult to manage the complete workflow around insider lists without a professional solution. Relying on Excel is not the best answer, especially given that a list needs to be stored for five years after each update. MTF-listed firms should set up a professional system and process from the start. For issuers on a regulated market, MAR is a good opportunity to review and improve current processes, and will also allow them to save a lot of time and money in the future.
How Can We Help?
The EQS INSIDER MANAGER is an internet-based solution stored in a secured private cloud that allows an integrated workflow. You can not only maintain your insider lists and insider projects, but also automatically inform your insiders with personalized mailings and documents that they simply acknowledge online. A record of every action you take will automatically be available in the system, which offers a sort-and-search function and allows the import and export of Excel files. You can also hand responsibilities over to different departments or colleagues overseas, as the system is available 24/7 and can be accessed from anywhere.
More information on the INSIDER MANAGER: www.insider-manager.com