MAR 2.3 Stabilisation under the Buy-back and Stabilisation Regulation
Conditions for stabilisation: general
Table: Article 7 of the Buy-back and Stabilisation Regulation
Article 7 |
Conditions for stabilisation |
In order to benefit from the exemption provided for in Article 8 of [the Market Abuse Directive], [stabilisation] of a [financial instrument] must be carried out in accordance with Articles 8, 9 and 10 of this Regulation [see MAR 2.3.4 E, MAR 2.3.5 EU and MAR 2.3.6 G]. |
Article 8 of the Market Abuse Directive is implemented in the United Kingdom in section 118A(5)(b) of the Act.
For the purposes of article 2(8) of the Buy-back and Stabilisation Regulation the standards of transparency of the markets, exchanges and institutions referred to in MAR 2.2.1R (2) are considered by the FSA to be adequate.
Time related conditions for stabilisation
Table: Article 8 of the Buy-back and Stabilisation Regulation
Time related conditions for stabilisation |
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1. |
[Stabilisation] shall be carried out only for a limited time period. |
2. |
In respect of shares and other securities equivalent to shares, the time period referred to in paragraph 1 shall, in the case of an initial offer publicly announced, start on the date of commencement of trading of the [relevant securities] on the [regulated market] and end no later than 30 calendar days thereafter. |
Where the initial offer publicly announced takes place in a Member State that permits trading prior to the commencement of trading on a [regulated market], the time period referred to in paragraph 1 shall start on the date of [adequate public disclosure] of the final price of the [relevant securities] and end no later than 30 calendar days thereafter, provided that any such trading is carried out in compliance with the rules, if any, of the [regulated market] on which the [relevant securities] are to be admitted to trading, including any rules concerning public disclosure and trade reporting. |
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3. |
In respect of shares and other securities equivalent to shares, the time period referred to in paragraph 1 shall, in the case of a secondary offer, start on the date of [adequate public disclosure] of the final price of the [relevant securities] and end no later than 30 calendar days after the date of [allotment]. |
4. |
In respect of bonds and other forms of securitised debt (which are not convertible or exchangeable into shares or into other securities equivalent to shares), the time period referred to in paragraph 1 shall start on the date of [adequate public disclosure] of the terms of the offer of the [relevant securities] (i.e. including the spread to the benchmark, if any, once it has been fixed) and end, whatever is earlier, either no later than 30 calendar days after the date on which the issuer of the instruments received the proceeds of the issue, or no later than 60 calendar days after the date of [allotment] of the [relevant securities]. |
5. |
In respect of securitised debt convertible or exchangeable into shares or into other securities equivalent to shares, the time period referred to in paragraph 1 shall start on the date of [adequate public disclosure] of the final terms of the offer of the [relevant securities] and end, whatever is earlier, either no later than 30 calendar days after the date on which the issuer of the instruments received the proceeds of the issue, or no later than 60 calendar days after the date of [allotment] of the [relevant securities]. |
Disclosure and reporting conditions for stabilisation
Table: Article 9 of the Buy-back and Stabilisation Regulation
Article 9 |
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Disclosure and reporting conditions for stabilisation |
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1. |
The following information shall be [adequately publicly disclosed] by issuers, [offerors], or entities undertaking the [stabilisation] acting, or not, on behalf of such persons, before the opening of the offer period of the [relevant securities]: |
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(a) |
the fact that [stabilisation] may be undertaken, that there is no assurance that it will be undertaken and that it may be stopped at any time; |
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(b) |
the fact that [stabilisation] transactions are aimed to support the market price of the [relevant securities]; |
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(c) |
the beginning and end of the period during which [stabilisation] may occur; |
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(d) |
the identity of the [stabilisation] manager, unless this is not known at the time of publication in which case it must be publicly disclosed before any [stabilisation] activity begins; |
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(e) |
the existence and maximum size of any [overallotment facility] or [greenshoe option], the exercise period of the [greenshoe option] and any conditions for the use of the [overallotment facility] or exercise of the [greenshoe option]. |
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The application of the provisions of this paragraph shall be suspended for offers under the scope of application of the measures implementing [the Prospectus Directive], from the date of application of these measures. |
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2. |
Without prejudice to Article 12(1)(c) of [the Market Abuse Directive], the details of all [stabilisation] transactions must be notified by issuers, [offerors], or entities undertaking the [stabilisation] acting, or not, on behalf of such persons, to the competent authority of the relevant market no later than the end of the seventh daily market session following the date of execution of such transactions. |
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3. |
Within one week of the end of the [stabilisation] period, the following information must be adequately disclosed to the public by issuers, [offerors], or entities undertaking the [stabilisation] acting, or not, on behalf of such persons: |
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(a) |
whether or not [stabilisation] was undertaken; |
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(b) |
the date at which [stabilisation] started; |
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(c) |
the date at which [stabilisation] last occurred; |
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(d) |
the price range within which [stabilisation] was carried out, for each of the dates during which [stabilisation] transactions were carried out. |
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4. |
Issuers, [offerors], or entities undertaking the [stabilisation], acting or not, on behalf of such persons, must record each [stabilisation] order or transaction with, as a minimum, the information specified in Article 20(1) of [the ISD] extended to financial instruments other than those admitted or going to be admitted to the regulated market. |
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5. |
Where several [investment firms] or [credit institutions] undertake the [stabilisation] acting, or not, on behalf of the issuer or [offeror], one of those persons shall act as central point of inquiry for any request from the competent authority of the regulated market on which the [relevant securities] have been admitted to trading. |
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The FSA accepts as adequate public disclosure:
- (1)
disclosure through a regulatory information service or otherwise in accordance with Part 6 rules; or
- (2)
the equivalent disclosure mechanism required to be used in relation to the relevant regulated market.
Market integrity requires the adequate public disclosure of stabilisation activity by issuers or by entities undertaking stabilisation, acting or not on behalf of these issuers. Methods used for adequate public disclosure of such information should be efficient and can take into account market practices accepted by competent authorities. [Note: Recital 16 Buy-back and Stabilisation Regulation]
There should be adequate coordination in place between all investment firms and credit institutions undertaking stabilisation. During stabilisation, one investment firm or credit institution shall act as a central point of inquiry for any regulatory intervention by the competent authority in each Member State concerned. [Note: Recital 17 Buy-back and Stabilisation Regulation]
For the purposes of article 9(2) of the Buy-back and Stabilisation Regulation, the FSA is the competent authority of those markets listed as regulated markets at http://www.fsa.gov.uk/register/exchanges.do. Persons undertaking stabilisation will be taken to have notified the FSA for the purposes of article 9(2) if they email details of all their stabilisation transactions to stabilisation@fsa.gov.uk clearly identifying the offer being stabilised and the contact details for the persons undertaking the stabilisation.
Specific price conditions
Table: Article 10 of the Buy-back and Stabilisation Regulation
Article 10 |
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Specific price conditions |
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1. |
In the case of an offer of shares or other securities equivalent to shares, [stabilisation] of the [relevant securities] shall not in any circumstances be executed above the offering price. |
2. |
In the case of an offer of securitised debt convertible or exchangeable into instruments as referred to in paragraph 1, [stabilisation] of those instruments shall not in any circumstances be executed above the market price of those instruments at the time of the public disclosure of the final terms of the new offer. |
Conditions for ancillary stabilisation
Table: Article 11 of the Buy-back and Stabilisation Regulation
Article 11 |
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Conditions for ancillary stabilisation |
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In order to benefit from the exemption provided for in Article 8 of [the Market Abuse Directive], [ancillary stabilisation] must be undertaken in accordance with Article 9 of this Regulation and with the following: |
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(a) |
[relevant securities] may be overallotted only during the subscription period and at the offer price; |
(b) |
a position resulting from the exercise of an [overallotment facility] by an [investment firm] or [credit institution] which is not covered by the [greenshoe option] may not exceed 5 % of the original offer; |
(c) |
the [greenshoe option] may be exercised by the beneficiaries of such an option only where [relevant securities] have been overallotted; |
(d) |
the [greenshoe option] may not amount to more than 15% of the original offer; |
(e) |
the exercise period of the [greenshoe option] must be the same as the [stabilisation] period required under Article 8; |
(f) |
the exercise of the [greenshoe option] must be disclosed to the public promptly, together with all appropriate details, including in particular the date of exercise and the number and nature of [relevant securities] involved. |
Overallotment facilities and greenshoe options are closely related to stabilisation, by providing resources and hedging for stabilisation activity. [Note: Recital 19 Buy-back and Stabilisation Regulation]
Particular attention should be paid to the exercise of an overallotment facility by an investment firm or a credit institution for the purpose of stabilisation when it results in a position uncovered by the greenshoe option. [Note: Recital 20 Buy-back and Stabilisation Regulation.]