MAR 1.5 Market abuse (misuse of information)

The following behaviours are, in the opinion of the FSA , market abuse (misuse of information):

1. (1)

   dealing or arranging deals in qualifying investments based on relevant information, which is not generally available and relates to matters which a regular user would reasonably expect to be disclosed to users of the particular prescribed market or prescribed auction platform,3 but which does not amount to market abuse (insider dealing) (whether because the dealing relates to a qualifying investment to which section 118(2) does not apply or because the relevant information is not inside information); and

2. (2)

   a director giving relevant information, which is not generally available and relates to matters which a regular user would reasonably expect to be disclosed to users of the particular prescribed market, to another otherwise than in the proper course of the exercise of his employment or duties, in a way which does not amount to market abuse (improper disclosure) (whether because the relevant information is not inside information or for some other reason).

The factors taken into account in deciding whether or not information is generally available for the purposes of the definition of inside information (see MAR 1.2.12 E - MAR 1.2.13 E) will also be relevant when considering whether or not behaviour amounts to market abuse (misuse of information).

The factors taken into account in deciding whether or not a person's behaviour is "on the basis of" inside information (see MAR 1.3.3 E - MAR 1.3.5 E) will also be relevant when considering whether or not behaviour is "based on" relevant information which is not generally available to those using the market.

In the opinion of the FSA , the following factors are to be taken into account in determining whether or not a regular user would regard information as relevant information, and are indications that he would:

1. (1)

   the extent to which the information is reliable, including how near the person providing the information is, or appears to be, to the original source of that information and the reliability of that source; or

2. (2)

   if the information differs from information which is generally available and can therefore be said to be new or fresh information; or

3. (3)

   in the case of information relating to possible future developments which are not currently required to be disclosed but which, if they occur, will lead to a disclosure or announcement being made whether the information provides, with reasonable certainty, grounds to conclude that the possible future developments will, in fact, occur; or

4. (4)

   if there is no other material information which is already generally available to inform users of the market.

In the opinion of the FSA , the following factors are to be taken into account when considering whether a regular user would reasonably expect the relevant information to be disclosed to users of the particular prescribed market or prescribed auction platform,3 or to be announced, and accordingly whether behaviour is likely to be regarded by a regular user as failing to meet the expected standard and are indications that he would:

1. (1)

   if the relevant information has to be disclosed in accordance with any legal or regulatory requirement, such as:

   1. (a)

      information which is required to be disseminated under the Takeover Code(or its2equivalent in the relevant jurisdiction) on, or in relation to, qualifying investments; or

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   2. (b)

      information which is required to be disseminated under the Part 6 rules (or their equivalents in the relevant jurisdiction); or

   3. (c)

      information required to be disclosed by an issuer under the laws, rules or regulations applying to the prescribed market on which its issued qualifying investments are traded or admitted to trading; or

2. (2)

   if the relevant information is routinely the subject of a public announcement although not subject to any formal disclosure requirement, such as:

   1. (a)

      information which is to be the subject of official announcement by governments, central monetary or fiscal authorities or a regulatory body (financial or otherwise, including exchanges); or

   2. (b)

      changes to published credit ratings of issuers of qualifying investments; or

   3. (c)

      changes to the constituents of a securities index, where the securities are qualifying investments; or

3. (3)

   if behaviour is based on information relating to possible future developments, if it is reasonable to believe that the information in question will subsequently become of a type within (1) or (2).

The following behaviour may amount to market abuse (misuse of information):

1. (1)

   X, a director at B PLC, has lunch with a friend, Y. X tells Y that his company has received a takeover offer. Y places a fixed odds bet with a bookmaker that B PLC will be the subject of a bid within a week, based on his expectation that the take over offer will be announced over the next few days.

2. (2)

   Informal, non-contractual icing of qualifying investments by the manager of a proposed issue of convertible or exchangeable bonds, which are to be the subject of a public marketing effort, with a view to subsequent borrowing by it of those qualifying investments based on relevant information about the forthcoming issue:

   1. (a)

      which is not generally available; and

   2. (b)

      which a regular user would reasonably expect to be disclosed to users of the relevant prescribed market;

   where this has the effect of withdrawing those qualifying investments from the lending market in order to lend it to the issue manager in such a way that other market participants are disadvantaged.

3. (3)

   An employee of B PLC is aware of contractual negotiations between B PLC and a customer. Transactions with that customer have generated over 10% of B PLC's turnover in each of the last five financial years. The employee knows that the customer has threatened to take its business elsewhere, and that the negotiations, while ongoing, are not proceeding well. The employee, whilst being under no obligation to do so, sells his shares in B PLC based on his assessment that it is reasonably likely that the customer will take his business elsewhere.