MAR 2.2 Stabilisation: general
Permitted stabilisation
Stabilisation or ancillary stabilisation may be carried out by a firm in relation to a significant distribution of securities, if:
- (1)
they are relevant securities that have been admitted to trading on a regulated market or a request for their admission to trading on such a market has been made, and the stabilisation is carried out in accordance with the Buy-back and Stabilisation Regulation (see MAR 2.3); or
- (2)
the securities are not within (1) and they:
- (a)
have been admitted to trading on a market, exchange or other institution included in MAR 2 Annex 1 R; or
- (b)
a request for their admission to trading on such a market, exchange or institution has been made; or
- (c)
are or may be traded under the rules of the International Securities Markets Association; and
the stabilisation or ancillary stabilisation is carried out in accordance with the provisions in MAR 2.4.
- (a)
Relevant securities include financial instruments that become fungible after an initial period because they are substantially the same, although they have different initial dividend or interest payment rights. [Note: Recital 13 Buy-back and Stabilisation Regulation.]
Scope of stabilisation "safe harbours" for market abuse
For the purposes of section 118A(5)(a) of the Act, behaviour (whether by a firm or not) conforming with the MAR 2.2.1R (2) does not amount to market abuse.
- (2)
offer or attempt to do anything in (1) with a view to supporting the market price of the relevant securities.
The effect of article 8 of the Market Abuse Directive and section 118A(5)(b) of the Act is that behaviour by any person which conforms with the stabilisation provisions in the Buy-back and Stabilisation Regulation (see MAR 2.3) will not amount to market abuse.
However, the mere fact that stabilisation does not conform with the stabilisation provisions in the Buy-back and Stabilisation Regulation (see MAR 2.3) or with) MAR 2.2.1R (2) will not of itself mean that the behaviour constitutes market abuse. [Note: Recital 2 Buy-back and Stabilisation Regulation]
Block trades
In relation to stabilisation, block trades are not considered as a significant distribution of relevant securities as they are strictly private transactions. [Note: Recital 14 Buy-back and Stabilisation Regulation]
Behaviour not related to stabilisation
On the other hand, the exemptions created by the Buy-back and Stabilisation Regulation only cover behaviour directly related to the purpose of stabilisation activities. Behaviour which is not directly related to the purpose of stabilisation activities is therefore considered in the same way as any other action covered by the Market Abuse Directive and may result in sanctions, if the competent authority establishes that the action in question constitutes market abuse. [Note: Recital 3 Buy-back and Stabilisation Regulation]
In order to avoid confusion of market participants, stabilisation activity should be carried out by taking into account the market conditions and the offering price of the relevant security and transactions to liquidate positions established as a result of stabilisation activity should be undertaken to minimise market impact having due regard to prevailing market conditions. [Note: Recital 18 Buy-back and Stabilisation Regulation]
Rights of action for damages
A contravention of the rules in MAR 2 does not give rise to a right of action by a private person under section 150 of the Act (and each of those rules is specified under section 150(2) of the Act as a provision giving rise to no such right of action).