A Person Discharging Managerial Responsibilities (PDMR) refers to any individual having authority over the issuer. The Market Abuse Regulation (MAR) Article 3(1)(25) defines PDMR as:
- Members of the management, supervisory and administrative bodies of the issuer.
- Other senior-level executives with regular access to inside information and the authority to make decisions that can directly or indirectly affect the prospects of securities.
Who qualifies as a PDMR?
According to the above definition of PDMR outlined in MAR:
- The first category refers to the board of directors, CEO, president and some COOs.
- The second category typically includes members of the issuer’s management group. Who qualifies as a PDMR in this category primarily depends on an organisation’s size and business operations.
What are the insider dealing risks?
Due to their position within a company, PDMRs will often have access to inside information regarding financial securities and, in these circumstances, they should be placed on the event-based insider list for that information.
MAR prohibits the unlawful disclosure of inside information that could impact the price of securities if it were made public. PDMRs often possess such information, and using it to inform their trades would be a violation. This is one of the reasons behind closed periods in MAR, during which a PDMR cannot trade in their company’s stock for 30 calendar days before the announcement of an interim financial report or year-end report.
PDMR obligations
PDMRs have the following obligations to ensure MAR compliance:
Disclosure requirements
According to MAR Article 19, PDMRs are required to notify the issuer and the regulatory bodies if they plan on executing personal transactions with the issuer’s financial securities authorised for trade on the EU markets.
Additionally, PDMRs executing transactions with emission allowances must inform the regulatory authorities of their involvement in the auctions of those and associated derivatives. The issuer must make the notification public within three business days after the transaction.
Reporting obligations
PDMRs must notify the relevant authorities of all individuals who qualify as their closely associated persons (PCAs). They must also notify the PCAs, in writing, of their obligations under MAR Article 19.
Pre-clearance procedures
PDMRs must submit a notification of their intention to trade in the company’s financial instruments. The issuer then has three working days to disclose this information.
Closed trading windows
A closed period under MAR is the time before the release of official public earnings reports. Even if this information is not precise, PDMRs and other company officials are prohibited from conducting any transactions with the issuer’s financial securities during this period.