What Is Wall-Crossing? Market Soundings Before a Block Trade
Wall-crossing means giving a potential investor confidential, price-sensitive information about a deal, such as a block sale, before it is public. In the EU and UK it is usually a market sounding under Article 11 of the Market Abuse Regulation, and an investor given inside information must not trade on it or pass it on until it is public or no longer inside information.
What is wall-crossing, and what is a market sounding?
Wall-crossing is market shorthand for bringing someone over the information barrier, or wall, that separates people holding confidential, price-sensitive information about a company from people trading its securities. In a deal, that person is usually a potential investor, told about a planned share sale or placing before it is public.
The Market Abuse Regulation, Regulation (EU) No 596/2014 (MAR), calls the exercise a market sounding, a wider term that also covers approaches involving no inside information; the UK Financial Conduct Authority (FCA) refers to both wall-crossed and non-wall-crossed soundings (Market Watch 51, September 2016).
Article 11(1) of MAR defines a market sounding as the communication of information, prior to the announcement of a transaction, if any, to gauge potential investors’ interest in a possible transaction and its conditions, such as its potential size or pricing. The sender must be an issuer; a secondary offeror whose sale is distinct from ordinary trading and uses a selling method based on a prior assessment of investor interest; an emission allowance market participant; or a third party acting on behalf or on the account of one of them. Article 3(1)(32) calls the sender the disclosing market participant, and MAR calls the investor the person receiving the market sounding.
The sensitive ingredient is inside information, which Article 7(1)(a) of MAR defines as information of a precise nature that has not been made public, relates to an issuer or its financial instruments and would be likely to have a significant effect on their prices if it were made public; Article 7(1)(d) separately covers information about pending orders, such as a client’s block.
When does a block trade involve a market sounding?
A sounded block sale typically engages two of the categories in Article 11(1): the selling shareholder as the secondary offeror, the seller of existing shares, and the bank or broker approaching investors for it as the third party acting on its behalf. Beyond size, Article 11(1)(b) requires a selling method based on a prior assessment of potential interest from investors, as when a bank gauges the appetite of selected institutions before launching a placing or an accelerated bookbuild (ABB), a rapid placement of a block with institutional investors, often overnight.
Since 4 December 2024 the EU definition has referred to communications before the announcement of a transaction "if any", so it expressly covers soundings never followed by an announcement; the definition in UK MAR, the version of MAR that became part of UK law after Brexit, does not contain those words. Recital 64 of Regulation (EU) 2024/2809, part of the package known as the EU Listing Act, gives the reason: inside information may be disclosed in that case too.
Who sounds also matters. In Market Watch 83, published on 8 September 2025, the FCA described a broker appointed by an issuer asking a second broker to sound its own investor contacts. Where the second broker sounded without the issuer’s knowledge, the FCA’s view was that it fell outside Article 11(1) of UK MAR and would not benefit from its safe harbour, the protection Article 11(4) gives against an allegation of unlawful disclosure; firms must assess each case. How the trade itself is struck and settled is covered under what is a block trade and on the block trades page.
Who is the disclosing market participant, and what must it do?
The disclosing market participant is the person in one of the Article 11(1) or 11(2) categories who discloses information in the sounding: the issuer or selling shareholder itself or, more often, the bank or broker acting for it. Before sounding, it must specifically consider whether the sounding will involve the disclosure of inside information, record its conclusion and the reasons in writing, update that record for each disclosure and provide it to the competent authority, the national regulator, on request (Article 11(3) of MAR).
To obtain the protection in Article 11(4), it must also obtain the recipient’s consent to receive inside information; tell the recipient that it is prohibited from using the information by acquiring or disposing of the financial instruments it relates to, or by cancelling or amending an order already placed; tell it that by agreeing to receive the information it is obliged to keep it confidential; and record what was disclosed, to whom and when. Records are kept for at least five years (Article 11(8)).
Commission Delegated Regulation (EU) 2016/960, applying since 3 July 2016, supplies the mechanics: a standard set of information given to every recipient in a pre-determined sequence, with a different set where the disclosing market participant considers that no inside information is involved, and the same level of information for all (Article 3); recorded telephone lines where it has them and the recipient consents (Article 2); lists of everyone sounded and of investors who have opted out of soundings, who must not be sounded (Article 4); and minutes of unrecorded meetings and calls signed by both sides (Article 6(3)).
As of October 2026, neither that regulation nor the companion Commission Implementing Regulation (EU) 2016/959, which sets the record templates, has been amended since the Listing Act, and both still refer to the deleted Article 11(5).
Did the EU Listing Act make market soundings optional?
Partly. Regulation (EU) 2024/2809 replaced Article 11(4) of MAR and deleted Article 11(5) with effect from 4 December 2024, the day it entered into force. A disclosing market participant is now deemed to have disclosed inside information in the normal exercise of its employment, profession or duties, for the purposes of the unlawful-disclosure provision in Article 10(1), where it opts to comply with the conditions on consent, warnings, confidentiality and records.
Recital 65 explains that the procedure is optional and carries protection from an allegation of unlawful disclosure; a participant that does not follow it is not presumed to have disclosed unlawfully, but cannot claim that protection. Two duties stay mandatory for every disclosing market participant: the pre-sounding assessment and record under Article 11(3), and the cleansing notice under Article 11(6), which tells recipients when information has ceased to be inside information.
As of October 2026, Article 11 of UK MAR has not taken the Listing Act changes and still deems disclosure in a sounding to be made in the normal exercise of a person’s duties where the disclosing market participant complies with paragraphs 3 and 5, which the FCA’s Market Watch 83 calls a safe harbour. UK MAR is listed for revocation in Schedule 1 to the Financial Services and Markets Act 2023, so the UK position should be checked before any transaction.
What must an investor do once it has been wall-crossed?
Article 11(7) of MAR states the first obligation: persons receiving a market sounding must assess for themselves whether they possess inside information. The European Securities and Markets Authority (ESMA) fills in the rest in its guidelines for persons receiving market soundings (ESMA/2016/1477), which apply from 10 January 2017 and which competent authorities and market participants must make every effort to comply with.
Under those guidelines, a recipient should route sounding information only through pre-determined reporting channels on a need-to-know basis, with clearly identified and trained assessors (paragraph 9); weigh the disclosing market participant’s view and all information available, without the assessor having to access information behind the firm’s own information barriers (paragraph 12); identify every issuer and financial instrument concerned (paragraph 14); sign the minutes of an unrecorded meeting or call within five working days or return its own signed version (paragraph 15); and keep records for at least five years (paragraph 16).
Some investors route approaches through a gatekeeper in compliance or the front office who decides whether to accept a wall-crossing. The FCA’s Market Watch 58 (December 2018) warns that even a declined wall-cross can convey inside information, for example where the bank making contact only sounds the market in a small number of securities.
Can you trade after being wall-crossed?
Not in the affected instruments while the information remains inside information. Article 14 of MAR prohibits insider dealing and unlawful disclosure. Article 8(1) treats as insider dealing both using inside information to acquire or dispose of the instruments it relates to and using it to cancel or amend an order placed before the information was received, and Article 10(1) makes onward disclosure unlawful unless made in the normal exercise of an employment, a profession or duties.
The restriction attaches to the information rather than automatically to the whole firm. Under Article 9(1), a legal person is not deemed to have used inside information merely because it possessed it if it has adequate and effective internal arrangements ensuring that neither the person who made the trading decision nor anyone who may have influenced it possessed the information, and it did not encourage or otherwise influence that decision.
Wall-crossing a gatekeeper or named individuals, rather than a whole investment team, therefore lets the rest of the firm keep trading, provided the barrier works. Whether it works is a question of fact, and Article 9(6) still allows an infringement to be found where a competent authority establishes an illegitimate reason for the trading.
How and when is a wall-crossed investor cleansed?
Cleansing is the point at which a wall-crossed investor is told, or can see, that what it received is no longer inside information, so that its trading restriction can be lifted. Under Article 11(6) of MAR, where information disclosed in a sounding ceases to be inside information in the disclosing market participant’s assessment, that participant must inform the recipient as soon as possible and record that it has done so. Since 4 December 2024 the EU text adds that this does not apply where the information has otherwise been announced publicly; Article 11(6) of UK MAR has no such exception.
Article 5 of Delegated Regulation 2016/960 sets the content of the cleansing notice, including the transaction, the date and time of the sounding and the date on which the information ceased to be inside information, and Implementing Regulation 2016/959 requires the notice to be given in writing and recorded on a set template (Article 4).
For a block, cleansing usually follows one of two paths: if the deal launches, the public announcement puts the information in the market; if it is pulled or parked, there may be no announcement, and the investor relies on the bank’s notice and its own assessment. The FCA’s Market Watch 58 distinguishes public cleansing, through a regulatory announcement or press release, from private cleansing by a communication to investors, and advises agreeing the cleansing strategy as early as possible, including for a deal that fails or is parked. Even after a notice, ESMA’s guidelines expect the recipient to reassess independently (paragraph 13).
Is wall-crossing required in the United States?
No. As of October 2026, US federal securities law has no counterpart to Article 11 of MAR: no statutory definition of a market sounding, no prescribed script and no regulatory cleansing notice. Wall-crossing rests instead on other rules and on contract.
Regulation Fair Disclosure (Regulation FD), a US Securities and Exchange Commission (SEC) rule that applies to Exchange Act reporting issuers other than foreign private issuers, foreign governments and most investment companies, requires the issuer, whenever it or a person acting on its behalf discloses material non-public information to brokers, investment advisers, funds or holders likely to trade on it, to make the information public, simultaneously if the disclosure is intentional (17 CFR 243.100(a)).
The duty is the issuer’s alone; a disclosure by a selling shareholder or its bank counts only where it is a person acting on the issuer’s behalf as defined in 243.101(c). The requirement does not apply to a disclosure made to a person who expressly agrees to maintain the information in confidence (243.100(b)(2)(ii)), which is one reason issuer-led US wall-crossings are documented with an express confidentiality agreement.
A confidentiality agreement also binds the investor. Under Rule 10b5-2(b)(1), a duty of trust or confidence exists whenever a person agrees to maintain information in confidence, for the purposes of the misappropriation theory of insider trading under Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5, so trading on the information before it is public risks insider-trading liability. In practice the agreement commonly also restricts trading until the information has been made public, by the issuer or through the deal’s announcement, or until a set period has passed.
Separately, registered broker-dealers must establish, maintain and enforce written policies and procedures reasonably designed to prevent the misuse of material non-public information (Section 15(g) of the Exchange Act), and Rule 5270 of the Financial Industry Regulatory Authority (FINRA) bars members and their associated persons from trading ahead of an imminent block transaction while holding material, non-public market information about it, whether for an account in which they have an interest or discretion or for a customer or affiliate they have tipped, until the whole block has been completed and publicly reported or the information is stale, subject to exceptions such as information barriers and trades that facilitate the customer’s block with its consent. The table compares the three positions.
| Point | European Union (MAR, as amended) | United Kingdom (UK MAR) | United States |
|---|---|---|---|
| Legal basis | MAR Article 11, as amended by Regulation (EU) 2024/2809 from 4 December 2024 | UK MAR Article 11, without the Listing Act changes | No market-sounding regime; Regulation FD, Section 10(b) and Rule 10b-5, and contract |
| Status of the procedure | Optional safe harbour: a participant that follows Article 11(4) is deemed to disclose in the normal exercise of its duties | Safe harbour where Article 11(3) and 11(5) are complied with (Article 11(4)) | No prescribed procedure |
| Pre-sounding assessment | Mandatory written record of whether inside information is involved (Article 11(3)) | Mandatory written record (Article 11(3)) | Not prescribed |
| Consent and warnings | Consent, warnings on dealing and confidentiality, and records (Article 11(4)(a) to (f)) | The same steps (Article 11(5)) | Express confidentiality agreement, which takes an issuer’s disclosure outside Regulation FD (243.100(b)(2)(ii)) |
| Cleansing notice | As soon as possible once no longer inside information, unless otherwise announced publicly (Article 11(6)) | As soon as possible once no longer inside information, with no public-announcement exception (Article 11(6)) | By contract, commonly through public announcement of the deal or disclosure by the issuer |
| Recipient’s position | Assesses for itself whether it holds inside information (Article 11(7)); ESMA guidelines ESMA/2016/1477 apply | Assesses for itself (Article 11(7)) | Agreeing to confidentiality creates a duty of trust or confidence (Rule 10b5-2(b)(1)) |
| Records | Kept for at least five years (Article 11(8)) | Kept for at least five years (Article 11(8)) | No sounding-specific rule; registered broker-dealers must establish, maintain and enforce policies against misuse of material non-public information (Section 15(g)) |
How do soundings work for an overnight block or accelerated bookbuild?
It depends on whether investors hear of the deal before or after it is public. Where a sale is launched publicly, for example after the market closes at the start of an overnight bookbuild, investors that place orders after the launch are acting on information that is already public and need not be wall-crossed for it.
A sounded deal adds a private step before launch. With the seller’s authority, the bank approaches selected investors to test demand, size or price (an average of 33 per deal in the FCA’s April 2026 review of 50 UK accelerated bookbuilds), and each becomes a person receiving a market sounding, restricted until cleansed if it has received inside information, normally by the launch announcement or, if the deal does not go ahead, by the bank’s notice under Article 11(6). The choice trades price discovery against the risk of leakage, and practice varies by market and by deal.
A bilateral block sold to a single principal can narrow the circle further, since the seller may need to approach only one counterparty committing its own capital before the print, although that approach can itself be a sounding and the principal is then restricted while it holds inside information. The structural differences between the routes are set out under block trade versus accelerated bookbuild, and the terms used are defined in the glossary.
Why do soundings matter for block pricing and leakage?
Every person who learns of a block before it prints is a channel through which the price can move against the seller: the more investors a sounding reaches, the better the read on appetite and the greater the chance that someone sells or shorts the stock ahead of the trade.
Supervisors watch the size of the circle. In Market Watch 83 the FCA reported disclosing market participants sounding a relatively large number of recipients without a process for considering how many were contacted, cited as good practice a senior employee or committee approving the initial list and any additions, and flagged email chains expanding without obvious control over who was added or whether they had been wall-crossed by the gatekeeper.
Enforcement shows the cost. In January 2024 the SEC announced that Morgan Stanley & Co. LLC had agreed to settle fraud charges over its block trading business. The SEC’s orders find that the firm and the former head of its equity syndicate desk disclosed information about upcoming block trades to certain buy-side investors, despite the sellers’ confidentiality requests, with the understanding that they would pre-position by taking significant short positions, and that the firm failed to enforce information barriers (SEC press release 2024-6, 12 January 2024).
Leakage feeds into price: a buyer that suspects the market already knows about a line will bid lower, as covered under how a block trade is priced and selling a large block without moving the price.
What should a seller weigh before a block is sounded?
As general information, a seller planning a block faces four questions about soundings: whether to sound at all and how widely, including who approaches whom and on whose authority; how sounded investors will be cleansed if the deal launches, stalls or is abandoned; which regimes apply; and what follows the print.
On the third, the EU, UK and US approaches now differ and more than one can apply to the same deal: EU and UK MAR turn on where the shares are admitted to trading or traded, wherever the parties are, while the US rules turn on the issuer, the firms involved and where the trade takes place. On the fourth, disclosure runs on separate clocks, through post-trade publication of the trade, covered under where a block actually prints, and any substantial-holding notification, covered under do block trades have to be disclosed.
This article is general information, not legal advice. Market-sounding rules and guidance are revised periodically, so the position should be confirmed against the current texts and independent legal advice taken on any specific transaction.
Frequently asked.
01What does it mean to be wall-crossed?
02What is a market sounding under MAR?
03Who is a disclosing market participant?
04Can you trade after being wall-crossed?
05How is a wall-crossed investor cleansed?
06Is wall-crossing required in the United States?
07Did the EU Listing Act make market soundings optional?
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