I. Introduction

The purpose of this newsletter is to set out the main changes introduced in the consolidated text of the Spanish Securities Market Act approved by Royal Legislative Decree 4/2015 of 23 October (the “LMV”) through Royal Decree-Law 19/2018 of 23 November on payment services and other urgent financial measures (“RDL 19/2018”), in order to adapt the LMV to the market abuse regulation[1] (the “MAR”).

II. Main developments

​​a) Inside information and relevant information

Before the entry into force of RDL 19/2018, the distinction between the concepts of inside information and relevant information on many occasions reflected doubts in this regard. RDL 19/2018 has amended Sections 226 and 227 of the LMV, regarding inside and relevant information, respectively. The new wording defines both concepts as follows:

· Inside information will be any information that may be regarded as such in accordance with the provisions of article 7 of the MAR. Specifically, section 1.a) of such article defines it as “the information of a precise nature, which has not been made public, relating, directly or indirectly, to one or more issuers or to one or more financial instruments, and which, if it were made public, would be likely to have a significant effect on the prices of those financial instruments or on the price of related derivative financial instruments”.

· Relevant information will be any other financial or corporate information relating to the issuer itself or to its securities or financial instruments that must be published by the issuer, under any legal or regulatory provision, or that the issuer deems it necessary to disclose due to being of particular interest.

Issuers must provide both the inside information and the relevant information to the Spanish National Securities Market Commission (the “CNMV”) for its subsequent publication. In this regard, when disclosing inside information, a record will be made at all times of such requirement. The main impact of this formal requirement is that before making the information known issuers must make a judgment as to whether the information is inside or relevant information. In addition, the CNMV’s website will present inside information separately from any other information made known by the issuers.

In the case of multilateral trading facilities (“MTFs”) and organised trading facilities (“OTFs”), Section 228.2 of the LMV establishes their obligation to have the necessary technical means for ensuring the public disclosure of inside information and provides for the possibility of using these same technical means for disclosing the relevant information.

Under the MAR, issuers may, under their responsibility, delay the disclosure of inside information provided that certain conditions are met. In such cases, immediately after making the information public the issuer must provide evidence that such conditions are met. According to the new wording of Section 229 of the LMV, any issuer who decides to delay the disclosure of inside information will not be required to provide evidence that the conditions that justified such delay are met, unless this is expressly requested by the CNMV.  

b) Notification of transactions conducted by persons discharging managerial responsibilities and persons closely associated with them.

Under the MAR, the persons discharging managerial responsibilities at an issuer (in general, directors and senior executives) and the persons closely associated with them, have the obligation to notify of any transaction conducted on their own account relating to securities of such issuer, once the total amount has exceeded the threshold of EUR 5,000 within a calendar year. However, making use of the power conferred by the MAR, the new wording of the LMV raises this notification threshold from the previous amount of EUR 5,000 to EUR 20,000.

Therefore, in accordance with the new wording of Section 230 of the LMV, the persons discharging managerial responsibilities and the persons closely associated with them shall notify of any transaction that they conduct on their own account with securities of the relevant issuer, once the total amount has exceeded the threshold of EUR 20,000 within the same calendar year. Such total amount shall be calculated by adding without netting all transactions conducted with the issuer’s securities within a calendar year.

In this regard, the new wording of Section 231 of the LMV establishes the obligation of MTFs and OTFs to have the necessary technical means for ensuring the public disclosure of the transactions conducted by persons discharging managerial responsibilities and persons closely associated with them.

c) Internal code of conduct

RDL 19/2018 removes the obligation that issuers had to draw up an internal code of conduct in relation to the securities market and submit it to the CNMV. The purpose of the internal code of conduct of an issuer is to set out the applicable internal rules in relation to market abuse and, in particular, among other aspects, in relation to the handling of inside information and relevant information and transactions with treasury shares. Therefore, although according to the current wording of the LMV it is not mandatory to draw up such code and submit it to the CNMV, issuers may now, at their entire discretion, decide whether or not to keep the internal code of conduct.

d) Supervisory and inspection powers of the CNMV

The supervisory and inspection powers of the CNMV have also changed, extending its powers as a supervisory body. Pursuant to the new wording of the LMV, the CNMV may request the telephone and traffic data records held by the persons or institutions subject to the supervision, inspection and penalty provisions of the LMV. In those cases in which the CNMV has not been able to obtain by other means the necessary information for performing its functions, it will be authorised, in accordance with the fifteenth additional provision of Spanish Act 3/2018 of 5 December on the Protection of Personal Data and the Safeguarding of Digital Rights, to obtain from the operators that provide electronic communications services available to the public and from providers of information society services the data that it deems necessary for performing its supervisory and inspection functions. 

e) Infringements and penalties in accordance with the MAR

Lastly, RDL 19/2018 adapts the categories of infringements to the breaches of obligations and prohibitions set out in the MAR. The table below shows the categories of infringements and the maximum penalties that may be imposed for such infringements.