The Financial Services Act 2021 has been published, making it the first financial services primary legislation passed by the UK Parliament since the UK left the European single market.

There are some important future changes that issuers need to be aware of.

Issuers’ responsibility for notifying the market of transactions by PDMRs and persons closely associated with them

UK MAR requires persons discharging managerial responsibilities (PDMRs, being essentially senior managers) and those persons closely associated with them to notify both the issuer and the Financial Conduct Authority of their transactions in the issuer’s instruments. Currently, this notification must be made by the PDMR and their closely associated persons to the issuer within three business days of the transaction. The issuer must in turn notify the market within three business days of the transaction. This can be a difficult timeline to meet so the Act will require issuers to notify the market within two working days (“working days” will explicitly exclude England and Wales bank holidays) of receiving the notification from the PDMR and persons closely associated with them. This change is due to come into force on 29 June 2021.

Responsibility for maintaining insider lists

Currently, under the Market Abuse Regulation as retained in the UK, listed issuers “or any person acting on their behalf or on their account” are required to maintain an insider list. This has created uncertainty as to whether third parties acting on behalf of a listed issuer should be holding their own list or sending it to the issuer to hold. The Act clarifies that both listed issuers and those acting on their behalf or on their account must maintain such lists. This change is due to come into force on 29 June 2021.

Criminal penalty for insider dealing increased

Insider dealing is a criminal offence under the Criminal Justice Act 1993 carrying a penalty of up to seven years’ imprisonment on conviction on indictment. This penalty will be increased to a maximum of ten years. The government’s rationale for the increase is that the maximum sentence for fraud, which is considered a comparable economic crime, is currently ten years and that market abuse could be perceived as a lesser crime, increasing the likelihood of market abuse. This change in law will come into force on a date to be specified by HM Treasury.

Criminal penalty for market manipulation increased

Market manipulation is a criminal offence under the Financial Services Act 2012, currently carrying a penalty of up to seven years’ imprisonment. For the reason outlined above, this sentence will also be increased to ten years, again on a date yet to be specified by HM Treasury.