Financial Services Companies may disclose confidential Information about their Clients to regulated Markets and alternative Marketplaces

Date 24 okt. 2016
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Financial services companies are subject to confidentiality in relation to their clients; however they may disclose the client's confidential information to the operator of a regulated market or an alternative marketplace. This is the assessment of the Danish FSA which they announced in a statement issued 21 September 2016.


The question was raised by NASDAQ Copenhagen in connection with a member refusing to disclose confidential information about a client’s custody portfolio with reference to the member's duty of confidentiality set out in Section 117 of the Danish Financial Business Act.


Permitted Disclosure

It is clear that in principle, financial services companies must not disclose confidential client information. This follows from the financial services companies’ duty of confidentiality described in the Financial Business Act, Section 117(1).


Disclosure and use may, however, take place provided that it is deemed just based on an individual assessment of the disclosure, including the recipient's legitimate interest, the degree of necessity of the disclosure, and whether the recipient is subject to confidentiality.

The FSA has assessed the disclosure of information based on the obligation applicable to operators of regulated markets and alternative marketplaces in order to drive the markets in a responsible manner. This includes monitoring issuers and members in the markets to ensure that market rules are respected and to intercept potential cases of insider trading and market manipulation.


On this basis, it is the opinion of the FSA that the need to investigate potential criminal conduct, including the disclosure of data for this purpose, outweighs the client's interest in the information being kept secret.


The FSA further notes that the disclosure is made to companies that are subject to the same degree of confidentiality under the Danish Securities Trading Act.


In light of this, the FSA concludes that the disclosure of confidential client information to any operator of a market is legitimate when it occurs in relation to the operator’s market surveillance obligations.


Our Assessment

The question involved specific information about a client's custody portfolio and the statement is therefore not directed at all confidential client information held by any financial services company.


It is our opinion that despite the general wording of the statement, financial services companies will be forced to deal with the justification of disclosure on a case-by-case basis in order to ensure compliance with their duty of confidentiality and are thus still obligated to make an assessment of the legitimacy of each disclosure, including the recipient's legitimate interest and the degree of necessity of the disclosure.



If you have any questions or would like more information about financial services companies' disclosure of information to operators of the markets, please do not hesitate to contact Partner Dan Moalem ( or Junior Associate Andreas Løndahl Hertel (


The above does not constitute legal counselling and Moalem Weitemeyer Bendtsen does not warrant the accuracy of the information. With the above text, Moalem Weitemeyer Bendtsen has not assumed responsibility of any kind as a consequence of any reader’s use of the above as a basis for decision or considerations.