Market Abuse Regulation — Insider Acknowledgements
The Market Abuse Regulation stipulates that all those with access to inside information must be added to an Insider list. Both companies and those acting on their behalf must take all reasonable steps to ensure that any such person acknowledges the legal and regulatory duties which come with being on such a list. They must also be made aware of the sanctions applicable to insider dealing and the unlawful disclosure of inside information.
Whilst not a specific requirement, research conducted among our 160+ Insidertrack users suggests that it’s good governance to receive an acknowledgement from an Insider within 24 hours of the individual being added to the list. However, the research also reveals that the average acknowledgement response time is approximately 2 days, a full 24 hours longer than desirable. In fact, less than a quarter of acknowledgements were received within 24 hours, despite the Insidertrack system having flexible, automated, ‘chasing’ functionality.
Our clients also tell us that acknowledgement response times are often requested by a Regulator when making enquiries into MAR-related issues. If the company is unable to evidence that Insiders have acknowledged their legal and regulatory duties within a reasonable timeframe, this could be viewed by a Regulator as a failure to take the ‘reasonable steps’ required by the Regulation.
So, given the level of importance — what can companies do to reduce acknowledgement response times?
How Can Acknowledgement Times be Reduced?
// Education
A better-trained potential Insider who fully understands the impact of not responding to an acknowledgement request is more likely to act in a timely manner. In short, regular training is an essential ingredient of the governance process.
Insidertrack can help you to develop your own training package, using our module which has been produced in partnership with a global law firm. Our video training and flexible testing system enables clients to ensure that all insiders meet the regulatory requirements and can do so in a timely manner.
To ensure that it is fresh and current, we are in the process of updating the training package. The new version will enable clients to seamlessly incorporate elements of their own training, if required.
// Chasing and Monitoring
In busy organisations, issues of compliance sometimes aren’t given the priority they should be.
Companies need a strategy for chasing and monitoring their outstanding acknowledgements. Our research suggests that chasing non-responders should commence on day one and continue every 24 hours until an acknowledgement has been received.
When it comes to chasing these acknowledgements, Insidertrack can help with whatever strategy you choose. You can determine the wording you use, how frequently the chaser is sent, and to which categories of your Insider population. Our dashboard functionality will keep you up-to-date on the number of non-responders, and specifically who they are, thereby allowing you target particular teams [and/or repeat ‘offenders’].
Some clients adopt a different approach for PDMRs, preferring to engage personally, rather than via emails. Insidertrack allows for each category of Insider to be treated differently.
// It’s not just the content, it’s the sender
Evidence suggests that Insiders respond more quickly when an acknowledgement request comes from their employer rather than from a third-party system provider. Insidertrack allows for emails to originate from your company domain, which will undoubtably help to increase acknowledgement response times.
// Ease of Acknowledgement
In a busy world, the simpler the process, the more likely it is to succeed.
We recognise that Insiders receive large volumes of emails, meaning that some can slide to the bottom of an inbox if they’re perceived to be time-consuming to deal with. Ensuring the acknowledgment can be completed easily via a simple click of a link, will help fully-educated Insiders to provide their acknowledgement quickly.
Our new Insidertrack App also includes an option for ‘push’ notifications to be sent directly to an Insider’s phone. From there, a quick tap to open, a review of the required materials, and then another tap is all that is required to complete the acknowledgement process. It’s a process that can be completed at any time, and anywhere in the world.
In addition to providing acknowledgements via the App, Insiders can submit permission to deal requests and view projects that they are involved in. Company Secretariat are also able to use the App to approve dealing requests on the move.
If you would like to discuss any of the ideas contained in this article, or the Insidertrack functionality generally, please contact Richard Nelson.
