SREP Exercise and Resolution Planning Outcomes as Inside Information under MAR

When it comes to banks, disclosure – as a means towards market discipline – can be considered from the standpoint of both Basel’s Pillar 3 and (in case of listed banks) the Market Abuse Regulation. Especially in the latter context, it is controversial whether the specific layer of information consisting of a) the ECB’s measures taken when performing the yearly Supervisory Review and Evaluation Process (SREP), i.e. the so called SREP decision, and b) the resolution planning (including the setting of MREL levels), which the Single Resolution Board is responsible for, have to be considered as inside information under MAR. As it is apparent, this issue is highly critical when such disclosure reveals that a bank is in financial distress, as far as disclosure could potentially prompt an idiosyncratic crisis. According to the ESMA’s position, in both of the above-mentioned cases each credit institution has to assess, under its own responsibility, whether decisions taken by Supervision and Resolution Authorities, under SREP and resolution planning, actually have to be disclosed. This paper focuses on SREP exercise and resolution planning (including MREL calibration) decisions, assessing their relevance as inside information under the requirements of precision and price-sensitivity set out in Article 7 MAR, and the subsequent existence of an obligation to disclose under Article 17 MAR. The relevance of the SREP’s draft letter is also considered in this respect. Moreover, the paper investigates whether, and to what extent, a single bank’s stability concern can be considered as a «legitimate interest» for delaying disclosure, either under Article 17(5) MAR (that is, when there is a public interest in delaying disclosure in order to preserve the financial system’s stability) or under Article 17(4) MAR (when delay meets the need of preserving the issuer’s legitimate interests).