AFM Supervision – The Impact and Regulation of Pre-Close Calls

The Dutch Authority for the Financial Markets (AFM) has released its latest Supervision Market Watch, focusing on the practice of pre-close calls—meetings between issuers and analysts held just before the “quiet period” preceding financial results. While intended to ensure analyst estimates accurately reflect previously disclosed public information, these calls are under scrutiny for their potential to create information asymmetries.

Key Findings from the AFM Survey

In late 2025, the AFM surveyed 85 Dutch listed companies to understand how these calls are managed.

• Prevalence: 33% (16 out of 49) of respondents conduct pre-close calls.
• Format: 75% of these issuers prefer one-to-one meetings over group calls.
• Purpose: The primary goal is to “touch base” and ensure analysts have not missed or misunderstood any public disclosures that could lead to unintended earnings surprises.
• Policy Shifts: Since the European Securities and Markets Authority (ESMA) published “good practices” in May 2024, 27% of respondents have updated their policies, with three issuers stopping the calls entirely.

Market Impact: “Not Neutral Events”

The AFM’s quantitative analysis reveals that pre-close calls have a statistically significant, albeit modest, impact on market behaviour.

• Increased Activity: On the day of a call, trading volume is 13% higher and share price volatility is 12% higher compared to regular trading days.
• Benchmark: This impact is comparable to the release of an Article 17 MAR press release, though it is significantly lower than the volatility seen during actual quarterly earnings announcements (which see 116% higher volatility).
• The Risk: Even if unintended, subtle nuances or confirmations provided during these private calls can shape market expectations and trading behavior, potentially violating the Market Abuse Regulation (MAR).

ESMA Good Practices for Issuers

To mitigate the risk of unlawful disclosure of inside information, the AFM encourages strict adherence to ESMA’s recommendations:

• Pre-Assessment: Thoroughly review all information beforehand to ensure no inside information is shared.
• Transparency: Publicly announce calls in advance and publish agendas and supporting materials (like slides) on the company website simultaneously.
• Record Keeping: Record calls and maintain scripts or notes to be made available to the public or regulators upon request.

The AFM will continue to monitor these interactions closely to ensure fair and transparent financial markets.

OUR RESPONCE TO FD ARTICLE 

In an article published by the Financiele Dagblad on the 14th of October, it was claimed by the authors that pre-close or pre-earnings calls – as they are known in the industry – have created an “unlevel playing field”, asserting that AEX companies may give a selected group of analysts and investors access to information that the rest of the market does not have.

As the leading association for investor relations professionals in The Netherlands, we would like to provide our own perspectives as well as broader observations from the community.

We noted your article published on 14 October 2024. As the leading association for the investor relations (IR) community in The Netherlands, we would like to provide our own perspectives as well as broader observations.

It is important to note that the investment community relies on research analyst estimates published by investment banks and brokerages (known as the ‘sell-side’) to gauge market expectations for upcoming results publications. Following the implementation of MiFID II in the European Union, it has become common practice for listed companies to compile and publish consensus estimates of key financial metrics from the analysts who cover them. The consensus process is a vital part of ensuring transparency and educating all investors, particularly those without direct access to sell-side investment research, such as retail investors.

The objective of a formal pre-close call and the consensus process is to ensure that the investment community:

• has a clear overview of all relevant publicly known developments and their potential impact on financial performance during the last reporting period;
• is reminded of all relevant (and incidental) developments during the comparative period, ensuring that the comparative data provides a solid basis for a fair comparison;
• can quickly assess and evaluate the actual financial performance upon publication digesting all relevant information efficiently so that the share price movements appropriately reflect this.  

This is why many IR teams have (formal pre-close) calls with the analysts covering their stock. During these interactions with sell-side analysts, IR teams strictly refer to information already in the public domain, such as relevant observable market developments, published guidance and sensitivity analysis, and reported financial metrics. IR teams will have company-organised calls, but analyst and investors can also ask for a call up to the last day before the quiet period. We believe such practices are fully in line with current applicable regulations, including the recent ESMA guidance issued in May 2024.

Many companies have a small number of analysts covering them. This means the quality of consensus is highly dependent on the analyst’s correct use of all publicly available information. The smaller the set of analysts, the larger the risk that consensus gets distorted by outliers or errors. Such errors often occur during the preview period (i.e. the period in which analysts publish their earnings preview ahead of companies’ publications). 

Consensus estimates are used by investors ahead of earnings, especially hedge funds who take long/short positions. The higher the deviation of consensus estimates from results, the more volatile the share price after publication. If consensus is distorted by outliers or errors, the greater the possibility of increased share price volatility.

IR departments do not use formal pre-close calls to share information that is non-public such as current trading, revised guidance or forecasts or any events that have occurred during the quarter and which are not known to the market.

From our perspective, there are certain best practices that IR teams should follow during a formal pre-close call and consensus compilation process:

• As noted above, it is essential that these interactions do not share price sensitive information and only refer to publicly available information. This ensures compliance both with the Market Abuse Regulation (MAR) as well as ESMA’s best practice guidance;
• The fact that a formally organised pre-close call has taken place should be made public on the company’s website;
• The formal pre-close call script should also be published to provide all market participants visibility into the main discussion points;
• Lastly, the company-compiled consensus output should be published as soon as it is finalised, ensuring all market participants have full visibility ahead of results publication

NEVIR, the Netherlands Association for Investor Relations

This response was sent to the Financiele Dagblad.