The end of the Model Code: FCA publishes policy statement on Market Abuse Regulation and changes to the FCA Handbook

Written on 29 Apr 2016

The Financial Conduct Authority published on 28 April 2016 its policy statement on the changes to the FCA Handbook (principally, the Disclosure Rules and the Listing Rules) required to reflect the introduction of the Market Abuse Regulation. MAR comes into effect across the EU from 3 July 2016; further background on MAR can be found here.

One notable feature of the policy statement is that the Model Code, the longstanding rules governing share dealing by “persons discharging managerial responsibility” or PDMRs, is being deleted. This is because MAR regulates PDMR dealing (in both Main Market and AIM companies) by prescribing a mandatory 30 day close period prior to annual and interim financial reporting events, which is different in a number of respects (principally length) to close periods under the Model Code.

In its earlier consultation paper on MAR changes, the FCA proposed to keep the Model Code as guidance for listed companies but responses to that consultation raised the issue that this would in effect create a two tier system of regulation of PDMR dealing that would be unworkable in practice. The FCA has taken on board this feedback and accordingly is not keeping the Model Code, or equivalent guidance, in any form. The FCA notes the suggestion in consultation feedback of an industry-led development of codes or best practice in this area and is supportive such a development.

AIM companies

The Model Code does not apply to AIM companies. Instead, under AIM Rule 21, directors and employees likely to be in possession of unpublished price sensitive information are restricted from dealing in the company’s shares and related financial instruments during the two months prior the publication of its half year and full year results, and at any other time when the AIM company is in possession of unpublished price sensitive information.

In light of the overlap between the MAR obligation and the existing scope of AIM Rule 21, AIM Regulation is proposing to replace AIM Rule 21 with an obligation for AIM companies to adopt a dealing policy. Whilst AIM Regulation does “not intend to prescribe the detailed content of the dealing policy“, it does “propose to set out the minimum provisions that [AIM Regulation] would expect to see in the policy“. AIM companies will need to update the existing dealing policies to reflect this guidance (when issued). Click here for our summary of the other aspects of AIM Regulation’s consultation on MAR rule book changes.

Summary of current restrictions on dealing under the Model Code, AIM Rule 21 and MAR

Model Code Current AIM Rule 21 MAR
Catches PDMRs (must also seek to restrict dealings by their connected persons) Directors and employees likely to be in possession of unpublished price sensitive information PDMRs
Mandatory pre-financials close periods
(assuming six monthly reporting)
  • 60 days prior to any preliminary announcement of annual results (or period from end of financial year to announcement, if shorter); or
  • 60 days prior to publication of the annual report (or period from end of financial year to publication, if shorter)
  • the period between the half year and the publication of the interim report
  • Two months prior to publication of annual report





  • Two months prior to publication of interim report
  • 30 days prior to publication of annual report*
  • 30 days prior to publication of interim report

* Currently unclear as to whether publication of preliminary results would qualify as annual report. Further FCA guidance is expected

Mandatory prohibited period when there is unpublished PSI in relation to issuer Yes Yes No

OC Comment

Doing away with the Model Code is a significant step for the FCA, and it has clearly not taken the decision lightly. It will be interesting to see what transpires between now and 3 July 2016 in relation to the development of an industry led code; we expect one will emerge before MAR implementation. For the moment, companies should familiarise themselves with the MAR PDMR regime.