ESMA clarifies exchange rate to be used to calculate MAR PDMR dealing threshold

The European Securities and Markets Authority has published a revised version of its Q&A on the EU Market Abuse Regulation. There are various new questions on investment recommendations and one on notification of transactions by persons discharging managerial responsibilities.

Notification of transactions by PDMRs and CAPs

Under Article 19 of MAR, PDMRs and their closely associated persons must notify transactions carried out on their own account to the issuer and the competent authority (and the issuer must notify the market). There is a de minimis threshold in Article 19(8) so that transactions do not have to be notified until they cross a threshold of €5000 per calendar year. A new Question 1 of Section 2 has been added to the Q&A which details the exchange rate to be used to calculate whether the threshold has been crossed when a transaction is carried out in another currency (e.g. pounds sterling or South African Rand). The exchange rate to be used is the official daily spot foreign exchange rate which is applicable at the end of the business day when the transaction is conducted. Where available for the currency in question, the daily euro foreign exchange reference rate as published on the website of the European Central Bank should be used. Click here for the ECB website.

Impact for issuers

74% of those who participated in a survey at our MAR seminars in June indicated that they would ignore the de minimis threshold and notify all PDMR and CAP transactions, to avoid the risk of error in calculating the threshold.

Those who are making use of the threshold will need to be sure to use the correct rate, from the date each transaction was conducted (not the date it was notified) and, if the threshold is not passed on the first transaction in a calendar year, keep records of those calculations so that the next transaction that year may be added on to assess whether the threshold is reached at that point.

What are the ESMA Q&A?

The document, which will be updated from time to time, is designed to give ESMA's responses to questions posed by the general public and competent authorities in relation to the practical application of the MAR framework. The purpose of the Q&As is to help consistency between competent authorities and provide extra clarity for market participants. The document is not intended to create an extra layer of requirements.

Click here for the updated ESMA Q&A.

Click here for a video on our Knowledge Portal giving an update on UK market practice under MAR.