Changes to PDMR dealing notification regime

The Financial Services Bill has been introduced to Parliament. It amends certain aspects of the legislative and regulatory framework for financial services following the end of the Brexit transition period, currently scheduled to be 31 December 2020.

The Bill proposes changes to the EU Market Abuse Regulation (EU MAR) regime as it will apply in the UK following the end of the Brexit transition period by virtue of The Market Abuse (Amendment) (EU Exit) Regulations 2018.

EU MAR was amended in December 2019 such that when a person discharging managerial responsibilities (PDMR) notifies a dealing in shares to an issuer, the issuer will have two business days to disclose the dealing to the market from the date of notification (rather than the notification by the PDMR to the issuer and the disclosure by the issuer to the market having to be made within the same three days of the dealing). This amendment to EU MAR is effective from 1 January 2021. As this is after the Brexit transition period is scheduled to end, this change would not be automatically incorporated into UK law. The Bill ensures that this change will apply in the UK from 1 January 2021.

The Bill also clarifies that issuers and any person acting on their behalf or on their account are all required to maintain an insider list when in possession of inside information.

Other key reforms in the Bill include:

• Criminal sanctions for market abuse – The Bill proposes to increase the criminal sentences for insider dealing and market manipulation from seven to ten years in the UK; and
• LIBOR transition – The Bill proposes changes to the UK’s benchmark regime to address the LIBOR transition. It gives powers to the Financial Conduct Authority to manage the wind-down period prior to the discontinuation of LIBOR from the end of 2020.

The Bill is due to have its second reading in the House of Commons on 9 November 2020.