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2. Process of 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 4
For the purposes of Article 10(1), disclosure of inside information made in the course of a market sounding shall be deemed to be made in the normal exercise of a person’s employment, profession or duties where the disclosing market participant complies with paragraphs 3 and 5 of this Article.

Paragraph 8
The disclosing market participant shall keep the records referred to in this Article for a period of at least five years.

Delegated Regulation (2016/960)

Article 1

Disclosing market participants shall ensure that the arrangements and procedures they establish to comply with paragraphs 4, 5, 6 and 8 of Article 11 of Regulation (EU) No 596/2014 are regularly reviewed and updated where necessary.

Article 2

Paragraph 1 
Disclosing market participants shall establish procedures describing the manner in which market soundings are conducted.

Disclosing market participants may communicate information for the purposes of market sounding to the persons receiving the market sounding orally, in physical meetings, in audio or video telephone calls, or in writing, by mail, fax or electronic communications.

Paragraph 3
The procedures referred to in paragraphs 1 and 2 shall ensure that persons working for a disclosing market participant under contract of employment or otherwise only use equipment provided by the disclosing market participant when sending and receiving telephone calls and electronic communications for the purposes of market soundings.

Article 3

Paragraph 1
Disclosing market participants shall have in place procedures to exchange a standard set of information with the persons receiving the market sounding during market soundings, in a pre-determined sequence.

Paragraph 2
The standard set of information referred to in paragraph 1 shall be determined by the disclosing market participant for each market sounding, prior to conducting that market sounding. The disclosing market participant shall use that standard set of information with all the persons receiving that market sounding.

Paragraph 3
Where disclosing market participants consider that the market sounding will involve the disclosure of inside information, the standard set of information referred to in paragraph 1 shall include and be limited to the following, in the stated order:

  1. statement clarifying that the communication takes place for the purposes of a market sounding;
  2. where the market sounding is conducted by recorded telephone lines, or audio or video recording is being used, a statement indicating that the conversation is recorded and the consent of the person receiving the market sounding to be recorded;
  3. a request for and a confirmation from the contacted person that the disclosing market participant is communicating with the person entrusted by the potential investor to receive the market sounding and the reply to that request;
  4. a statement clarifying that, if the contacted person agrees to receive the market sounding, that person will receive information that the disclosing market participant considers to be inside information and a reference to the obligation laid down in Article 11(7) of Regulation (EU) No 596/2014;
  5. where possible, an estimation of when the information will cease to be inside information, the factors that may alter that estimation and, in any case, information about the manner in which the person receiving the market sounding will be informed of any change in such an estimation;
  6. a statement informing the person receiving the market sounding about the obligations laid down in Article 11(5) subparagraph 1 points (b), (c) and (d) of Regulation (EU) No 596/2014;
  7. a request for the consent of the person receiving the market sounding to receive inside information, as referred to in Article 11(5) subparagraph 1 point (a) of Regulation (EU) No 596/2014 and the reply to that request;
  8. where the consent required under point (g) is given, the information being disclosed for the purposes of the market sounding, identifying the information considered by the disclosing market participant to be inside information.

Paragraph 4
Where the disclosing market participant considers that the market sounding will not involve the disclosure of inside information, the standard set of information referred to in paragraph 1 shall include and be limited to the following, in the stated order: 

  1. a statement clarifying that the communication takes place for the purposes of a market sounding;
  2. where the market sounding is conducted by recorded telephone lines or audio or video recording is being used, a statement indicating that the conversation is recorded and the consent of the person receiving the market sounding to be recorded;
  3. a request for and a confirmation from the contacted person that the disclosing market participant is communicating with the person entrusted by the potential investor to receive the market sounding and the reply to that request;
  4. a statement clarifying that, if the contacted person agrees to receive the market sounding, that person will receive information that the disclosing market participant considers not to be inside information and a reference to the obligation laid down in Article 11(7) of Regulation (EU) No 596/2014;
  5. a request for the consent of the person receiving the market sounding to proceed with the market sounding and the reply to that request;
  6. where the consent required under point (e) is given, the information being disclosed for the purposes of the market sounding.

Paragraph 5
The disclosing market participant shall ensure that the same level of information is communicated to each person receiving the market sounding in relation to the same market sounding.

Article 6

Paragraph 1
Disclosing market participants shall ensure that records of the following are kept on a durable medium that ensures their accessibility and readability over the period of retention laid down in Article 11(8) of Regulation (EU) No 596/2014: 

  1. the procedures referred to in Articles 1 and 2;
  2. the standard set of information determined for each market sounding in accordance with Article 3;
  3. the data regarding persons receiving the market sounding referred to in Article 4;
  4. all communications of information which have taken place between the disclosing market participant and all persons that received the market sounding for the purposes of the market sounding, including any documents provided by the disclosing market participant to the persons receiving the market sounding;
  5. the information leading to the assessment that the information communicated during the market sounding has ceased to be inside information and the relevant notifications referred to in Article 5.

Paragraph 2
For the purposes of Article 6(1)(d), the disclosing market participant shall keep: 

  1. where the communication of information has taken place by telephone on recorded lines, recordings of telephone conversations provided that the persons to whom the information is communicated have given their consent to such a recording;
  2. where the communication of information has taken place in writing, a copy of the correspondence;
  3. where the communication of information has taken place during video or audio recorded meetings, the recordings of those meetings provided that the persons to whom the information is communicated have given their consent to such a recording;
  4. where the communication of information has taken place during unrecorded meetings or telephone conversations, the written minutes or notes of those meetings or telephone conversations.

Paragraph 3
The written minutes or notes referred to in paragraph 2(d), shall be drawn up by the disclosing market participant and duly signed by both the disclosing market participant and the person receiving the market sounding and shall include: 

  1. the date and time of the meeting or telephone conversation and the identity of the participants;
  2. the details of the information related to the market sounding which were exchanged between the disclosing market participant and the person receiving the market sounding in the course of the market sounding, including information provided to the person receiving the market sounding and requested from the person receiving the market sounding in accordance with the standard set of information referred to in Article 3;
  3. any document and material provided by the disclosing market participant to the person receiving the market sounding in the course of the market sounding.

Where the disclosing market participant and the person receiving the market sounding have not agreed within 5 working days after the market sounding on the content of the written minutes or notes, the disclosing market participant shall record both a version of the written minutes or notes signed by the disclosing market participant and a version thereof signed by the person having received the market sounding. 

Where the person having received the market sounding has not provided the disclosing market participant with a signed version of the written minutes or notes within 5 working days after the market sounding, the disclosing market participant shall keep a copy of the written version of the minutes or notes signed by the disclosing market participant.

Paragraph 4
The records referred to in paragraphs 1, 2 and 3 shall be made available to the competent authority upon request.

Implementing Regulation (2016/959)

Article 1

All the records referred to in Article 6 of Commission Delegated Regulation (EU) 2016/9601 shall be kept in an electronic format.

Article 2

Disclosing market participants shall draw up the written minutes or notes referred to in Article 6(2)(d) of Delegated Regulation (EU) 2016/960 in an electronic format using:

  1. the template set out in Annex I where disclosing market participants consider that the market sounding involves the disclosure of inside information;
  2. the template set out in Annex II where disclosing market participants consider that the market sounding does not involve the disclosure of inside information.

Article 3

Paragraph 1
Disclosing market participants shall keep records of the information referred to in Article 4(1) of Delegated Regulation (EU) 2016/960 in the form of separate lists for each market sounding.

Paragraph 2
Disclosing market participants shall keep records of the information referred to in Article 4(2) of Delegated Regulation (EU) 2016/960 in the form of a single list.

 

1 Commission Delegated Regulation (EU) 2016/960 of 17 May 2016 supplementing Regulation (EU) No 596/2014 of the European Parliament and of the Council with regard to regulatory technical standards for the appropriate arrangements, systems and procedures for disclosing market participants conducting market soundings (see page 29 of this Official Journal).

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