On 30 March 2016, the European Securities and Markets Authority (ESMA) published a consultation on draft guidelines under the Market Abuse Regulation (MAR). ESMA is seeking views on its proposed non-exhaustive indicative list of information expected or required to be published on commodity derivatives markets or spot markets for the purposes of determining inside information regarding commodity derivatives and of triggering the prohibitions for insider dealing.
This consultation covers a very broad range of commodities and price influencing factors, literally from the price of gold to the price of fish. The Level 1 text is very generic and ESMA has been tasked with providing non- exhaustive guidance on information which is reasonably expected or required to be disclosed. The examples provided by ESMA so far can only be tentative forays into what could potentially be many years’ worth of interpretation.
ESMA has focused on established sources of market information (for example, government/public bodies, trading venues, spot markets, NGOs and warehouses) but are actively seeking input from market participants given the complexity of the different commodity markets. These are potentially diverse sources: where the questions relate to the underlying spot markets, for instance, the wholesale traders in cut flowers at London’s New Covent Garden could be well placed to contribute to some corners of the discussion. A follow-on question is perhaps legitimately whether some relevant sources are even aware of this consultation. Where ESMA has provided specific examples it is likely that specific feedback will be provided by the market. On the other hand, it is less clear that questions of the form ‘Can you think of other examples?’ will provide useful responses, if any.
In order to comply with MAR an organisation needs to understand the definition of inside information and consider when data becomes information that meets the definitions, and hence should be controlled and potentially disclosed publically.
Participants should read the consultation and at least satisfy themselves that they do not disagree with the specific examples relevant to their commodities markets. If they do disagree, they should respond. Any examples provided are likely to be subject to a broad peer-group discussion. However, it is not clear that a second iteration of consultation is provided for in the timelines and therefore unclear that suggested new examples will be peer-reviewed sufficiently to provide useful guidance.
We also note that the final guidance resulting from this consultation is only indicative, rather than being exhaustive.