Managing insider lists is a critical aspect of compliance with the Market Abuse Regulation (MAR). This post will provide you with an understanding of insider list management and best practices as well as why your organisation should begin shifting from a manual to an automatic insider list management system.
The Market Abuse Regulation (MAR) is a European Union regulation aimed at preventing market abuse, such as insider trading and market manipulation. One of the key requirements of MAR is the management of insider lists, which are records of individuals who have access to inside information related to a company’s financial instruments.
Insider list management is crucial for ensuring compliance with MAR, as it helps companies track and control the flow of inside information, preventing unauthorised access and potential market abuse. Failure to maintain accurate and up-to-date insider lists can result in significant penalties and reputational damage for companies.
An effective insider list management process under MAR should include the following components:
Currently, a large number of companies who are obliged to follow MAR use excel (or equivalent), and while manual processes such as Excel might seem convenient and cost-effective, they are not the optimal solution, and far from best practices, when managing insider lists in compliance with MAR.
The complexities and potential consequences associated with managing insider information necessitate a more robust, secure, and reliable solution. Manual methods like spreadsheets can be prone to human error, and they lack the necessary controls to effectively manage access to sensitive information.
Additionally, with the constant updates required for keeping an insider list up-to-date, a manual process can become an overwhelming task. In contrast, secure software solutions, such as Logwise, designed for this purpose offer a streamlined approach. We provide advanced features such as automatic updates, audit trails, and advanced access controls, significantly reducing the risk of non-compliance and the accompanying penalties.
We will now lay out examples of best practices for insider list management under MAR and how a manual solution can hinder you from adhering to them.
Establish a retention procedure for insider lists, ensuring that they are retained for at least five years, as required by MAR.
Storing spreadsheets securely for a period of at least five years, as required by MAR, poses a host of challenges. There’s the risk of data loss due to technical glitches, inadvertent deletions, or physical damage to the storage device. Furthermore, managing access to these stored lists over such a long period can be complex and fraught with risk.
Develop and implement clear policies and procedures for insider list management, including guidelines for identifying insiders, creating and maintaining insider lists, and controlling access to inside information.
Excel, while ubiquitous and flexible, lacks the in-built mechanisms needed to enforce clear policies and procedures. It doesn’t have functionality to systematically control how and when data is entered, which can lead to inconsistencies and potential breaches of MAR.
Assign responsibility for insider list management to a specific individual or team within the company, such as the compliance officer or legal department.
Responsibility assignment can be a major challenge with Excel. With spreadsheets, it’s difficult to track who made which changes, and when. This can lead to accountability issues if there’s a need for retrospective review or audit.
Use a centralised system for managing insider lists that offers a single, unified interface where all information can be viewed, edited, and updated to ensure consistency and ease of access.
This is a significant improvement over locally stored files, or files associated solely with one account, which may introduce issues of having to, eventually, manually compile data from many different sources.
Conduct regular audits of insider lists to ensure accuracy and compliance with MAR.
With Excel, the process of sorting through historical data can be cumbersome and inefficient, making the audit process lengthy and more susceptible to oversights
Maintain separate insider lists for different types of inside information, such as financial results, mergers and acquisitions, or other significant events.
Managing multiple separate lists can be complex and confusing in Excel, especially when dealing with different types of inside information. There’s also a risk of unintentionally mixing or losing data.
When reporting to your NCA (National Competent Authority) you are obliged to submit all timestamps in UTC. The use of UTC simplifies your NCAs work by providing a common time reference that avoids confusion arising from differing local times.
While Excel does allow users to adjust time zones manually, this can be a cumbersome and error-prone process, especially when dealing with a large number of entries from different time zones. The chances of human error are significant, with the potential for incorrect conversions that could lead to inaccurate records and non-compliance with MAR.
As you may be able to tell by now, technology can play a crucial role in streamlining and automating the insider list management process. Companies can leverage technology solutions, such as Logwise, to automate the creation and maintenance of insider lists and ensure compliance with MAR.
By adopting technology solutions, companies can save time and resources, reduce the risk of human error, and ensure a more efficient and compliant insider list management process.
Insider list management is a critical aspect of compliance with the Market Abuse Regulation (MAR). By following best practices and leveraging technology, companies can effectively manage insider lists and ensure compliance with MAR. Implementing a robust insider list management process not only helps companies avoid significant penalties and reputational damage but also contributes to the overall integrity and transparency of financial markets.
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