In response to questions on how the Market Abuse Regulation (MAR) might apply to information obtained via electoral polling, we set out how we expect firms and individuals to handle any information that has the potential to be inside information. This could include information obtained as a result of polling.
Determining whether information is inside information requires judgement based on the facts at the time. We encourage firms, where appropriate, to take legal advice on specific questions and actions which should be applied on a case by case basis.
It is important to note that all firms and individuals – regardless of whether they carry out regulated financial services activities – fall in scope of our regulatory remit on market abuse.
MAR states that inside information is ‘information of a precise nature, which has not been made public, relating, directly or indirectly, to one or more issuers or to one or more financial instruments, and which, if it were made public, would be likely to have a significant effect on the prices of those financial instruments or on the price of related derivative financial instruments.’
Where the MAR definition of inside information has been met, disclosing the information, other than where necessary in the normal exercise of employment, a profession or duties, would be an offence. So too would be trading of in-scope instruments on the basis of the information. As noted above, whether or not such information were inside information would need to be judged on a case-by-case basis.
For example, if an established polling firm is due to publish polling results and on publication the results are likely to affect the price of government bonds traded on regulated trading venues and meet the other criteria to be classified as inside information, then it could be an offence under MAR to share that information prior to publication other than where necessary “in the normal exercise of employment, a profession or duties”.
It could also be an offence for anyone in possession of the information to trade in the relevant government bonds in advance of publication of the polling results if it is trading on the basis of the anticipated bond price movement that will result from publication of the results.
Where the inside information definition is not met, MAR does not impose a restriction on individuals and firms collecting or receiving polling information relevant to financial market prices even while polls are open.
In addition, trading in spot foreign exchange (FX) is not covered by the insider dealing provisions of MAR. However, in these circumstances, other FCA rules such as the Principles for Business and other legislation may apply and firms should be aware of and comply with all relevant legislation. Trading in spot FX may also be covered by the MAR provisions on market manipulation where the trading has an impact on relevant financial instruments, such as certain spot FX options.
We note that it will be for authorities other than the FCA to enforce legislation that falls outside the scope of the FCA’s remit and its powers for enforcement.