MAR 1.9 Market abuse (misleading behaviour) & market abuse (distortion)

5Failure by a person to give adequate disclosure that he has reached or exceeded a disclosable short position where:

1. (1)

   that position relates, directly or indirectly, to securities which are the subject of a rights issue; and

2. (2)

   the disclosable short position is reached or exceeded during a rights issue period;

is behaviour which, in the opinion of the FSA, is market abuse (misleading behaviour).

1. (1)

   6 A person who enters into a transaction that (whether by itself or in conjunction with other transactions) has the effect of:

   1. (a)

      creating a net short position in a UK financial sector company; or

   2. (b)

      increasing any net short position in a UK financial sector company that the person had immediately before 19 September 2008;

   is, in the opinion of the FSA, engaging in behaviour that is market abuse (misleading behaviour).

2. (2)

   Paragraph (1) does not apply to a person acting in the capacity of a market maker.

3. (3)

   Paragraph (1) does not apply to a transaction entered into or an order placed before 19 September 2008.

4. (4)

   This provision ceases to have effect on 16 January 2009.

1. (1)

   6Failure by a person who has a disclosable short position in a UK financial sector company to provide adequate ongoing disclosure of their position is behaviour which, in the opinion of the FSA, is market abuse (misleading behaviour).

2. (2)

   In paragraph(1), "adequate ongoing disclosure" means disclosure made on a RIS by no later than 3.30pm on the business day following:7

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   1. (a)

      the first day on which the disclosable short position is held after 30 October 2008; and7

   2. (b)

      each day on which the disclosable short position changes.7

   The disclosure must include the name of the person who has the position, the amount of the disclosable short position and the name of the company in relation to which it has that position. Where the change in position results in the person no longer holding a disclosable short position, there must be disclosure made to that effect.7

3. (3)

   The first disclosure required under this provision is by 3.30pm on 23 September 2008 which should relate to positions held on 19 September and 22 September.

4. (4)

   This provision ceases to have effect on 16 January 2009.

In the opinion of the FSA , the following factors are to be taken into account in determining whether or not behaviour is likely to give a regular user a false or misleading impression as to the supply of or the demand for or as to the price or value of one or more qualifying investments or related investments:

1. (1)

   the experience and knowledge of the users of the market in question;

2. (2)

   the structure of the market, including its reporting, notification and transparency requirements;

3. (3)

   the legal and regulatory requirements of the market concerned;

4. (4)

   the identity and position of the person responsible for the behaviour which has been observed (if known); and

5. (5)

   the extent and nature of the visibility or disclosure of the person's activity.

In the opinion of the FSA , the following factors are to be taken into account in determining whether or not behaviour that creates a false or misleading impression as to, or distorts the market for, a qualifying investment , has also failed to meet the standard expected by a regular user:

1. (1)

   if the transaction is pursuant to a prior legal or regulatory obligation owed to a third party;

2. (2)

   if the transaction is executed in a way which takes into account the need for the market as a whole to operate fairly and efficiently; or

3. (3)

   the characteristics of the market in question, including the users and applicable rules and codes of conduct (including, if relevant, any statutory or regulatory obligation to disclose a holding or position, such as under DTR 5 ;

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4. (4)

   the position of the person in question and the standards reasonably to be expected of him in light of his experience, skill and knowledge;

5. (5)

   if the transaction complied with the rules of the relevant prescribed markets about how transactions are to be executed in a proper way (for example, rules on reporting and executing cross-transactions); and

6. (6)

   if an organisation has created a false or misleading impression, whether the individuals responsible could only know they were likely to create a false or misleading impression if they had access to other information that was being held behind a Chinese wall or similarly effective arrangements.