CopiedHandling (Inside) Information and Alternative Data

Most professionals affected by MAR know that, to be classified as inside information, the information needs to be considered precise with a likely significant price effect and not public. Still, a question recently debated is what is considered “public” data.

The Role of Alternative Data Copied

This question has become especially relevant given the increasing use of different forms of alternative (big) data. Such data can include:

• Advanced Internet of Things (IoT) data
• Website scraping results
• Processed social media data
• Advanced transactional/financial institution data
• Detailed sales data from major actors in specific fields
• Advanced shipping data
• Credit card transactions
• Processed satellite information data
• Mobile phone location data

Regulatory and Reputational Risks Copied

Regardless of the reputational and regulatory risks related to Internet and privacy legislation (such as GDPR), professionals are also concerned with the MAR perspective and the associated insider trading and securities law risks. The originality level of processed big data combined with high demand creates a risk of operating in a grey area, potentially bordering on a breach of confidentiality or fiduciary duties.

A pertinent question in this context is whether such information can be acquired or purchased by anyone or if there are limitations. Sometimes, data providers sell certain data with exclusivity agreements, available to only a few customers or sophisticated investors. The underlying pitch for such data is that the end-user will gain an edge by accessing exclusive information.

Due Diligence for Acquired Data Copied

Due diligence is essential to ensure that acquired data has been legally produced. This includes ensuring that all data providers respect rules related to copyright, confidentiality, intellectual property rights (IPR), and terms of use.

Borderline Cases and Data Sources Copied

Borderline cases may arise with processed data derived from advanced surveys and interviews. Such data may not always be public. Additionally, some data produced by third-party providers—such as intelligence or private investigations firms—may involve non-public data.

Inside information can originate from a wide range of sources beyond the issuer, including:

• Rogue employees, consultants, or stakeholders
• Competitors
• Leading analysts or journalists
• Regulators

Level Playing Field Principle Copied

A fundamental principle of EU legislation is maintaining a level playing field and avoiding unfair advantage. Combined with the relatively new MAR, these principles have resulted in uncertain practical applications, unlike the more established US Material Non-Public Information (MNPI) practices.

Practical Approach Copied

Given these risks and legal uncertainties, the most prudent approach is to exercise caution. In some cases, it may be straightforward to determine that data is public. Treating the data as inside information is advisable in others, where significant concerns exist. In borderline cases, the commercial imperative for using relevant information may necessitate a careful analysis by external legal experts.

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