On March 23rd 2018 the European Securities and Markets Authority (“ESMA”) updated its Questions and Answers on the market abuse regulation (“Q&A”) to amend Question 5.1 on the disclosure of inside information related to Pillar 2 requirements (“Question 5.1”).
In the context of credit institutions that are subject to both the market abuse regime, established under Regulation (EU) No 596/2014 on market abuse (the “Market Abuse Regulation”) as well as the prudential supervision of the banking regulators, Question 5.1 queried whether such credit institutions are required to publish systematically the results of the Pillar II assessment. This question has now been extended to cover whether credit institutions are also required under the Market Abuse Regulation to publish any information received in relation to the Minimum Requirement for own funds and Eligible Liabilities (“MREL”) exercise. The MREL exercise is conducted by the Single Resolution Board in accordance with Directive 2014/59/EU of May 15th 2014 establishing a framework for the recovery and resolution of credit institutions and investment firms (the “Bank Recovery and Resolution Directive”) and is intended to ensure banks have, at all times, enough capital and eligible liabilities to be bailed-in, where necessary.
ESMA has now confirmed that whenever a credit institution which is subject to the Market Abuse Regulation is made aware of information in the context of the MREL exercise, it is expected to evaluate whether that information meets the criteria of inside information. If it does, the relevant disclosure requirements under the Market Abuse Regulation will apply to that credit institution.