Entire Section
Disclosure of Inside Information
MKT 6.5.1 MKT 6.5.1
(1) AReporting Entity of aListed Fund must:(a) make timely disclosure ofInside Information in accordance with the requirements in this section; and(b) ensure that the disclosure it makes pursuant to (a) is not misleading, false or deceptive and does not omit anything likely to affect the import of the information.(2) For the purposes of complying with the requirement in (1)(a), theReporting Entity of aListed Fund must, subject to Rule 6.5.4 and 6.5.5, make disclosure to the market as soon as possible and in the manner specified in Rule 6.10.1.Derived from RM81/2011 (Made 30th November 2011). [VER1/11-11]MKT 6.5.1 Guidance
1. AReporting Entity of aListed Fund is required to discloseInside Information relating to theListed Fund to the market as soon as possible in accordance with the requirements in MKT Section 6.9. In practice, a short period before announcingInside Information is permitted where aReporting Entity is affected by an unexpected event and theReporting Entity needs to clarify the situation or take legal advice so that any information released is accurate and not misleading. Any delay should be limited to a period no longer than is reasonably necessary in the circumstances. Where there is a danger of the information leaking out in the meantime, theReporting Entity should make a holding announcement giving an outline of the subject matter of the announcement, the reasons why a full announcement cannot yet be made and undertaking to make a full announcement as soon as possible.2. For the disclosure to be not misleading, false or deceptive, aReporting Entity of aListed Fund should provide information that is accurate, factual and complete. Any incomplete or inaccurate information, such as omission of relevant information, would be misleading or deceptive. Information should be provided in an easy to understand manner and not for promotional purposes. The use of imprecise and confusing language such as 'double digit' or 'in excess of last year' should be avoided as it does not allow investors to properly assess the information for the purpose of making an informed decision relating to the relevantSecurities 3. A confidentiality agreement should not prevent aReporting Entity from complying with its obligations relating to the disclosure ofInside Information .4. If, for any reason, aReporting Entity of aListed Fund is unable, or unwilling to make a holding announcement it may be appropriate for theReporting Entity to file a report pursuant to MKT Rule 6.5.4(2) and for the trading ofUnits to be suspended until theReporting Entity of theListed Fund is in a position to make an announcement.Identifying
Inside Information relating to aListed Fund 5.Inside Information is defined in Article 63(1)(a) of the Law as:"information in relation toInvestments of a precise nature which:(i) is not generally available;(ii) relates, directly or indirectly, to one or moreReporting Entities or the issuer of theInvestments concerned or to one or more of the Investments; and(iii) would, if generally available, be likely to have a significant effect on the price of theInvestments or on the price of related investments."6. For the purposes of Article 63(1)(a) of the Law, information is considered "precise" if it:a. indicates circumstances that exist or may reasonably be expected to come into existence or an event that has occurred or may reasonably be expected to occur; andb. is specific enough to enable a conclusion to be drawn as to the possible effect of those circumstances or that event on the price ofInvestments or related investments.7. Similarly, information would be likely to have a "significant effect on price" if and only if it is information of that kind which a reasonable investor would be likely to use as part of the basis of his investment decisions.8. TheReporting Entity of aListed Fund is itself best placed to determine whether information, if made public, is likely to have a significant effect on the price of the relevantUnits , as what constitutesInside Information will vary widely according to circumstances.Financial forecasts and expectations
9. Where aReporting Entity of aListed Fund has made a market announcement such as a profit forecast, such forecasts become, as soon as made, factored into the market pricing of the relevantUnits . If theReporting Entity becomes aware that there is likely to be a material difference between the forecast and the true outcome, theReporting Entity should make an announcement correcting the forecast as soon as possible to ensure that the market pricing reflects accurate information.10. In relation to financial forecasts published by aReporting Entity of aListed Fund , theDFSA considers that circumstances giving rise to a variation from the previous one should generally be consideredInside Information and should be disclosed by theReporting Entity as soon as possible. Even where aReporting Entity has not made a previous forecast, circumstances giving rise to a variation of profit or revenue from the previous corresponding reporting period should be disclosed where such circumstances would have a significant effect on the price of relevantSecurities . Generally, a change of 10% or more is a material change, but in some circumstances, a smaller variation may also be disclosable if it would reasonably be considered to have a significant effect on the price of the relevantSecurities 11. In making such disclosure, theReporting Entity of aListed Fund should provide clear details of the extent of the variation. For example, aReporting Entity may indicate that, based on management accounts, its expected net profit will be an approximate amount (e.g. approximately $15 million) or alternatively within a stated range (e.g. between $14m and $16m). Alternatively, aReporting Entity may indicate an approximate percentage movement (e.g. up or down by 35%).Relationship between continuous disclosure and periodic disclosures
12. Periodic disclosures byReporting Entities ofListed Funds are required in a number of circumstances, and examples can include interim and annual financial reports and accounts and Prospectuses.13. In the course of preparing these disclosure documents, aReporting Entity of aListed Fund may become aware ofInside Information previously unknown to it, or information which was previously insufficiently precise to warrant disclosure. In such circumstances aReporting Entity of aListed Fund should not defer releasing that information until the periodic disclosure or other documents is finalised. In such circumstances, aReporting Entity should make an announcement containing theInside Information as soon as possible.Units of the same class admitted to trading in more than one jurisdiction14. AReporting Entity of aListed Fund withUnits of the same class admitted to trading in more than one jurisdiction should ensure that the release of announcements containingInside Information is co-ordinated across jurisdictions. If the requirements for disclosure are stricter in another jurisdiction than in theDIFC , theReporting Entity must ensure that the same information is released in theDIFC as in that other jurisdiction.15. AReporting Entity of aListed Fund should not delay an announcement in theDIFC in order to wait for a market to open in another jurisdictionInside information related to the use of Distributed Ledger Technology
16. Inside Information relating directly or indirectly to a Security Token may include matters arising due to the use of Distributed Ledger Technology that are capable of having a significant effect on the price of the Security Token. Such matters may, for example, include an interruption due to the creation of a ‘fork’ on the DLT or it becoming the target of a cyber-attack. A Reporting Entity for a Security Token must ensure that its systems and controls for the identifying, controlling and handling Inside Information are adequate and will operate effectively should such matters arise, including through appropriate disclosure to markets.Derived from RM81/2011 (Made 30th November 2011). [VER1/11-11]
[Added] DFSA RMI313/2021 (Made 30th June 2021). [VER18/10-21]