The European financial markets watchdog has issued a warning to companies having chats with analysts before they issue results publicly.
Companies should not disclose inside information on these pre-close calls, the European Securities and Markets Authority (ESMA) said in a statement this morning, warning that they carry “inherent risks of inadvertent unlawful disclosure.”
These pre-close calls are common practice in Europe prior to the blackout period before results, and often the timing mysteriously coincides with spikes or drops in the shares.
Or as ESMA put it, they "can influence market expectations and instrument prices", noting that it and national authorities have "recently observed a number of high volatility episodes in EU share prices, some of which took place shortly after 'pre-close calls'".
The regulator noted that financial media have reported the link between these calls and some volatile trading days, which raised suspicion about possible unlawful disclosure of inside information.
One industry title was told that pre-close calls have existed for over a decade due to a grey area in EU financial regulation, neither allowed or prohibited within market abuse regulations.