1. Process preceding the actual market sounding

It is important that during the market sounding process the disclosing market participant as well as the person receiving the market sounding, comply with the legal requirements. Market soundings are interactions between a seller of financial instruments and one or more potential investors, prior to the announcement of a transaction, in order to gauge the interest of potential investors in a possible transaction and its pricing, size and structuring.

MAR (No 596/2014)

Article 11

Paragraph 11
ESMA shall issue guidelines in accordance with Article 16 of Regulation (EU) No 1095/2010, addressed to persons receiving market soundings, regarding:

  1. the factors that such persons are to take into account when information is disclosed to them as part of a market sounding in order for them to assess whether the information amounts to inside information;
  2. the steps that such persons are to take if inside information has been disclosed to them in order to comply with Articles 8 and 10 of this Regulation; and
  3. the records that such persons are to maintain in order to demonstrate that they have complied with Articles 8 and 10 of this Regulation.

ESMA (MAR) Guidelines

Guideline 1 - Internal procedures and staff training

Point 9
The MSR should establish, implement and maintain internal procedures that are appropriate and proportionate to the scale, size and nature of their business activity, to:

  1. ensure that, where the MSR designates a specific person or a contact point to receive market soundings, that information is made available to the DMP;
  2. ensure that the information received in the course of the market sounding is internally communicated only through pre-determined reporting channels and on a need-to-know basis;
  3. ensure that the individual(s), function or body entrusted to assess whether the MSR is in possession of inside information as a result of the market sounding are clearly identified and properly trained to that purpose;
  4. manage and control the flow of inside information arising from the market sounding within the MSR and its staff, in order for the MSR and its staff to comply with Articles 8 and 10 of MAR.

Point 10
The MSR should ensure that the staff receiving and processing the information obtained in the course of the market sounding are properly trained on the relevant internal procedures and on the prohibitions, under Articles 8 and 10 of MAR, arising from being in possession of inside information. The training should be appropriate and proportionate to the scale, size and nature of MSR’s business activity.

Guideline 2 - Communicating the wish not to receive market soundings

Point 11
After being addressed by a DMP, the MSR should notify it whether they wish not to receive future market soundings in relation to either all potential transactions or particular types of potential transactions.

Guideline 5 - Written minutes or notes

Point 15
Where in accordance with point (d) of Article 6(2) of the RTS on market soundings the DMP has drawn up written minutes or notes of the unrecorded meetings or unrecorded telephone conversation, the MSRs should, within five working days after receipt:

  1. sign those minutes or notes, where they agree upon their content; or
  2. provide the DMP with their own version of those minutes or notes duly signed, where they do not agree upon their content.

Guideline 6 - record keeping

Point 16
MSRs should keep records in a durable medium that ensures accessibility and readability for a period of at least five years of:

  1. the internal procedures referred to in paragraph 1;
  2. the notifications referred to in paragraph 2;
  3. the assessments referred to in paragraph 3 and the reasons therefor;
  4. the assessment of related instruments referred to in paragraph 4;
  5. the persons working for them under a contract of employment or otherwise performing tasks through which they have access to the information communicated in the course of the market soundings, listed in a chronological order for each market sounding.

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