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13 January 2017

ESMA updates Q&A on PDMR notifications and investment recommendations

ESMA published updated MAR Q&A on 20 December 2016 here, summarised below.  

PDMR and PCA Notifications

€5,000 threshold

PDMR and PCA transactions in their company’s financial instruments are not required to be notified until the value has reached €5,000 within a calendar year, but MAR does not say how the calculation is to be made.

(A)       ESMA confirms that transactions carried out by a PDMR and by his or her persons closely associated (PCAs) should not be aggregated (Section 2, Q3).

(B)       The price to be used for calculating the threshold, so as to determine whether financial instruments received by way of gifts, donations and inheritance must be notified, will be the last published price for the financial instrument concerned in accordance with the post trade transparency requirements under MiFIR, when MiFIR becomes applicable on 3 January 2018.

In the meantime the price to use will be:

  •  for shares admitted to trading on regulated markets, the last published price in accordance with the post trade transparency requirements under MiFiD I on the date of acceptance or, where not available that day, the last published price;
  •  for shares admitted to trading or traded on MTFs only, bonds and derivatives or financial instruments linked thereto the last traded price on the trading venue where the instruments are traded on the date of acceptance or, where not available, the last traded price.

Where shares are traded on several venues (whether regulated markets and/or MTFs) then the concept of “most relevant markets in terms of liquidity” under MiFID I should be used to determine the trading venue of reference.  For other instruments, the trading venue of first admission should be used (Section 2, Q4).

Gifts, donations and inheritance

ESMA state that the price field in the online PDMR notification should be populated with 0 (zero).  (Section 2, Q4).

Shares received as part of a remuneration package

If the entitlement to the shares is subject to the occurrence of certain conditions, ESMA states the PDMR has to notify only upon the occurrence of the conditions and the actual execution of the transaction (e.g. presumably upon vesting of the shares) (Section 2, Q5).  Note that this is different from receipt of a stock option, where notification is required on receipt of a stock option granted as part of a remuneration package as well as on exercise of the option.

Investment recommendations (Article 20)

Factual information

ESMA states that any communication containing purely factual information on one or several financial instruments or issuers would not constitute an investment recommendation under MAR provided that it does not explicitly or implicitly recommend or suggest an investment strategy.  In this context, factual information might, among other things, include recent events on news relating to one or several financial instruments or issuers (Section 3, Q5)

Reporting referring to previously disseminated investment recommendation

ESMA states that communications intended for distribution channels or for the public which only report or refer to previously disseminated investment recommendations do not constitute an investment recommendation under provided they do not include any new elements of opinion or valuation or confirmation of the previous opinion or valuation, it will not amount to a new investment recommendation, but is still subject to Article 7 of the Delegated Regulation ((EU) 2016/956) if it is disseminated by the original producer of the investment recommendation, in which case it must include the date and time of the first issuance of the investment recommendation.

Where a person disseminates recommendations produced by third parties, they will need to comply with the requirements of Articles 8-10 of the Delegated Regulation (Section 3, Q6).

Recommendations related to derivatives traded solely outside a trading venue investment recommendations within scope of MAR

This depends on whether that derivative is in scope of MAR.  It will be in scope of MAR if its price or value depends on, or has an effect on the price or value of, a financial instrument that is admitted to trading on a regulated market or an MTF (of which a request for admission to trading on either has been made) or (when MiFIR comes into force) an OTF.  So whether or not the recommendation is a in scope MAR investment recommendation depends on whether or not the derivative is in scope of MAR.  ESMA states that firms are responsible for conducting their own assessment on a case by case basis as to whether a recommendation on a given derivative traded solely outside a trading venue is in scope of Article 20 of MAR and subject to the requirements (Section 3, Q7).

Reference to any previous recommendation relating to a derivative

When a recommendation differs from a previous recommendation concerning the same financial derivative made in the preceding 12 months the Delegated Regulation required details of the change and the date of the previous recommendation to be indicated.

If the derivative in question does not have a unique identifier, all reasonable efforts should be made to identify it by other means, which may include a proprietary taxonomy so as to provide meaningful discounts (Section 3, Q8).

For further information, please contact Victoria Younghusband on + 44 (0)20 7427 6707 or