What a wall-crossing record should contain, and why most are rebuilt after the deal

When a regulator, an auditor or your own compliance team asks about a market sounding, the first question is rarely “did you do it properly?”. It is “show me the record”. On many ECM desks that is the moment the work starts: someone opens a shared inbox, a spreadsheet of names and a folder of call notes, and pieces together what happened on a deal that closed weeks ago.

This article sets out what the record is supposed to contain, drawn from the Market Abuse Regulation as it applies in the UK, and where manual processes tend to fall short. It is a practical summary rather than legal advice. Your compliance team and the rules themselves, linked at the end, remain the authority.

Who has to keep the record

Article 11 of UK MAR puts the obligations on the disclosing market participant: the issuer, or the broker or bank acting for it, that communicates information to potential investors before a transaction is announced so as to gauge their interest. Investors who receive soundings have obligations of their own, but the record described here belongs to the sell side.

Before the first call: the assessment

Before a sounding starts, the disclosing market participant has to consider whether it will involve disclosing inside information, and make a written record of its conclusion and the reasons for it. That assessment must be updated if things change, and provided to the FCA on request.

In practice this is often the thinnest part of the file. The decision is made quickly, in conversation, by people who know the deal well, and the written version is drafted later from memory. A record made at the time, attached to the deal, is a different thing from one reconstructed after it.

Before disclosure: the four statements and the consent

Where a sounding will involve inside information, the rules require that before it is disclosed, the recipient:

• consents to receive it;
• is told they are prohibited from using it, or attempting to use it, by acquiring or disposing of the issuer’s securities;
• is told they are prohibited from using it by cancelling or amending an order already placed; and
• is told that by agreeing to receive it they are obliged to keep it confidential.

The order matters. Consent comes first, and the information follows. A sounding email that attaches the term sheet and asks for agreement in the same message gets that order the wrong way round.

The supporting rules also expect a standard set of information for each sounding, so that every investor sounded on the same transaction hears the same thing in the same order, and a process for respecting investors who have said they do not want to receive soundings at all.

During the sounding: what to record, investor by investor

For every disclosure, the record should show:

• who was sounded: the investing institution and the named individuals acting for it, including any gatekeeper who took the approach first;
• what they were told, including the four statements above;
• when each disclosure was made, to the date and time;
• how it was made, whether by email, recorded line or an unrecorded call; and
• who on your side made it.

Where a sounding is done by phone on an unrecorded line, the rules set out a process for written minutes or notes of the conversation, agreed with the recipient, to stand in for the recording. That is one of the steps most likely to be skipped under deal pressure, and one of the hardest to repair afterwards.

When the information stops being inside information: cleansing

Once the information ceases to be inside information, usually because the transaction is announced or abandoned, the disclosing market participant must tell each recipient as soon as possible and keep a record of having done so. Every investor who was wall-crossed has to be cleansed, and the record has to show it.

On a busy placing this is the step most often done in bulk and least often evidenced well. The announcement goes out, the desk moves on, and whether each wall-crossed investor was individually told, and when, is something nobody checks until somebody asks.

How long to keep it

The records must be kept for at least five years and be available to the FCA on request. Five years is long enough for staff to move on, inboxes to be archived and spreadsheets to be overwritten. A record that depends on one person remembering where things are will not last that long.

Where manual processes leave the gaps

None of this is complicated on its own. The difficulty is that a single placing can involve dozens of institutions, several people on each, gatekeepers in between, and a few hours from first call to book close. Run that across email, phone, chat and a spreadsheet, and the gaps tend to fall in the same places:

• Consent and disclosure out of order, because the email that asks for consent and the one that carries the material were sent too close together, or as one.
• Unattributed actions, where the spreadsheet shows that an investor was wall-crossed but not who did it.
• Missing timestamps, or timestamps that record when a row was typed rather than when the call happened.
• Incomplete cleansing, where most investors were told and nobody can prove which ones were not.
• A record that is rebuilt rather than kept, assembled after the deal from inboxes, which is slow and can only ever be as complete as the inboxes are.

A record that builds itself

The alternative is to run the sounding in a system that records each step as it happens. That is how DealBridge works: every approach, agreement, wall-cross and cleanse is timestamped and attributed to a named user while the deal runs, transaction material is sent only to investors who have agreed to be wall-crossed, and the whole record exports in one click. The compliance file is a by-product of doing the work, not a second job afterwards.

You can see the record it keeps, and what one broker’s own audit log shows, on the DealBridge home page, or read more about market sounding in DealBridge. If you would like to see it on one of your own transactions, book a demo.