Disclosure of Inside Information
MKT 6.5.1 MKT 6.5.1(1) A
Reporting Entityof a Listed Fundmust:(a) make timely disclosure of Inside Informationin 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), the Reporting Entityof a Listed Fundmust, 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 Guidance1. A
Reporting Entityof a Listed Fundis required to disclose Inside Informationrelating to the Listed Fundto the market as soon as possible in accordance with the requirements in MKT Section 6.9. In practice, a short period before announcing Inside Informationis permitted where a Reporting Entityis affected by an unexpected event and the Reporting Entityneeds 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, the Reporting Entityshould 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, a Reporting Entityof a Listed Fundshould 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 relevant Securities3. A confidentiality agreement should not prevent a Reporting Entityfrom complying with its obligations relating to the disclosure of Inside Information.4. If, for any reason, a Reporting Entityof a Listed Fundis unable, or unwilling to make a holding announcement it may be appropriate for the Reporting Entityto file a report pursuant to MKT Rule 6.5.4(2) and for the trading of Unitsto be suspended until the Reporting Entityof the Listed Fundis in a position to make an announcement.
Inside Informationrelating to a Listed Fund5. Inside Informationis defined in Article 63(1)(a) of the Law as:"information in relation to Investmentsof a precise nature which:(i) is not generally available;(ii) relates, directly or indirectly, to one or more Reporting Entitiesor the issuer of the Investmentsconcerned 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 the Investmentsor 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 of Investmentsor 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. The Reporting Entityof a Listed Fundis itself best placed to determine whether information, if made public, is likely to have a significant effect on the price of the relevant Units, as what constitutes Inside Informationwill vary widely according to circumstances.
Financial forecasts and expectations9. Where a
Reporting Entityof a Listed Fundhas made a market announcement such as a profit forecast, such forecasts become, as soon as made, factored into the market pricing of the relevant Units. If the Reporting Entitybecomes aware that there is likely to be a material difference between the forecast and the true outcome, the Reporting Entityshould 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 a Reporting Entityof a Listed Fund, the DFSAconsiders that circumstances giving rise to a variation from the previous one should generally be considered Inside Informationand should be disclosed by the Reporting Entityas soon as possible. Even where a Reporting Entityhas 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 relevant Securities. 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 relevant Securities11. In making such disclosure, the Reporting Entityof a Listed Fundshould provide clear details of the extent of the variation. For example, a Reporting Entitymay 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, a Reporting Entitymay indicate an approximate percentage movement (e.g. up or down by 35%).
Relationship between continuous disclosure and periodic disclosures12. Periodic disclosures by
Reporting Entitiesof Listed Fundsare 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, a Reporting Entityof a Listed Fundmay become aware of Inside Informationpreviously unknown to it, or information which was previously insufficiently precise to warrant disclosure. In such circumstances a Reporting Entityof a Listed Fundshould not defer releasing that information until the periodic disclosure or other documents is finalised. In such circumstances, a Reporting Entityshould make an announcement containing the Inside Informationas soon as possible. Unitsof the same class admitted to trading in more than one jurisdiction14. A Reporting Entityof a Listed Fundwith Unitsof the same class admitted to trading in more than one jurisdiction should ensure that the release of announcements containing Inside Informationis co-ordinated across jurisdictions. If the requirements for disclosure are stricter in another jurisdiction than in the DIFC, the Reporting Entitymust ensure that the same information is released in the DIFCas in that other jurisdiction.15. A Reporting Entityof a Listed Fundshould not delay an announcement in the DIFCin order to wait for a market to open in another jurisdiction
Inside information related to the use of Distributed Ledger Technology16. 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.