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MAR 2.4 Ancillary permitted stabilising action

MAR 2.4.1R

MAR 2.4.2 R and MAR 2.4.3 R enable the stabilising manager to over-allot or go short of securities, so as to facilitate his subsequent purchase of them by stabilising action; and he may buy or sell on the market in order to close out or liquidate positions established by stabilising action or by going short.1

PERMITTED ANCILLARY ACTION

MAR 2.4.2R

The stabilising manager may, subject to MAR 2.4.3 R:

  1. (1)

    with a view to supporting the price of the relevant securities by action under MAR 2.2.3 R:

    1. (a)

      make allotments of a greater number of the relevant securities than will be offered; or

    2. (b)

      sell or agree to sell relevant securities or associated securities so as to establish a short position in them; or

    3. (c)

      achieve a result equivalent to that in (b) by use of derivatives; or

  2. (2)

    buy or subscribe for or agree to buy or subscribe for relevant securities or associated securities in order to closeout or liquidate any position established under (1); or

  3. (3)

    sell or agree to sell relevant securities or associated securities in order to closeout or liquidate any position that has been established by stabilising action; or

  4. (4)

    achieve a result equivalent to that in (3) by use of derivatives; or

  5. (5)

    offer or attempt to do anything permitted by (1)(b) or (c), (2), (3) or (4).1

MAR 2.4.3R

MAR 2.4.2 R applies only if the stabilising manager has reasonable grounds for believing, and does believe, that the requirements in MAR 2.3 have been complied with.1

PRICE LIMITS

MAR 2.4.4R

Ancillary action under MAR 2.4.2 R (2) may be taken without regard to the limits on pricing in MAR 2.5.1

MAR 2.4.5R

Long or short positions can be established either in the cash market or by the use of derivatives. The extent to which derivatives may be used in stabilising action or in ancillary action is strictly limited. MAR 2 contemplates the use of derivatives only on the 'selling' side, that is as permitted ancillary action, under MAR 2.4.2 R(1)(c) and (4). This is because of the need for market transparency in any purchase transactions and because of the requirements which are applicable to firms in MAR 2.7.2 R for a single record of stabilising action taken.1

MAR 2.4.6R

MAR 2.4.2 R (2) extends to the purchase from the issuer during the stabilising period, or shortly after, by exercise of an option or other right, of further securities not previously allotted.1