MAR 2.8 Overseas Stabilisation
Under sections 144(3) and (6) of the Act, the FSA may make rules which confer a "safe harbour" in respect of one type of market manipulation (section 397(3)) on persons who act in conformity with specified provisions of foreign laws. Under that power, the FSA "specifies" certain legislative provisions having effect in the United States of America, Japan and Hong Kong. It should be noted that conformity with these provisions may assist in proceedings under section 397(3) but not in proceedings under section 397(2) nor in proceedings under Part V of the Criminal Justice Act 1993 (insider dealing). This is because of the wording of section 144(3).1
- (1)
A person who, in any place outside the United Kingdom, acts or engages in conduct:
- (a)
for the purposes of stabilising the price of investments; and
- (b)
in conformity with the provisions specified in (2), (3) or (3A); and1
- (c)
in relation to an offer which is governed by the law of a country (or a state or territory in a country) so specified;is to be treated for the purposes of section 397(5) of the Act (misleading statements and practices) as acting or engaging in conduct for that purpose and in conformity with the price stabilising rules.
- (a)
- (2)
In relation to the United States of America, the specified provisions are:Regulation M made by the Securities and Exchange Commission (17 CFR 242, # 100-105).
- (3)
In relation to Japan, the specified provisions are:
- (a)
The Securities and Exchange Law of Japan, (Law No 25, April 13 1948), Article 159, paragraphs 3 and 4;1
- (b)
Cabinet Orders for the Enforcement of the Securities and Exchange Law of Japan (Cabinet Order 321, September 30, 1965), Articles 20 to 26;
- (c)
Ministerial Ordinance concerning the Registration of Stabilisation Trading (Ordinance of the Ministry of Finance No 43, June 14, 1971);
- (d)
Ministerial Ordinance concerning rules and otherwise governing the soundness of securities companies (Ordinance of the Ministry of Finance, No 60, November 5, 1965), Article 2.
- (a)
- (3A)
In relation to Hong Kong, the specified provisions are:The Securities and Futures (Price Stabilizing) Rules, Cap. 571 W made by the Hong Kong Securities and Futures Commission.
- (4)
A person who is treated under (1) as acting or engaging in conduct in conformity with the price stabilising rules is also to be treated to an equivalent extent as so acting or engaging for the purposes of MAR 2.1.1 (2) above, and of Part XIV (Disciplinary measures) and Part XXV (Injunctions and Restitution) of the Act.
- (5)
The provisions in (2), (3) and (3A) are specified as they have effect from time to time, so long as this paragraph has effect.1
- (1)
The effect of MAR 2.8.2R (4) is to confer a defence in the following classes of cases:
- (a)
proceedings under Part VIII of the Act in cases of market abuse;
- (b)
disciplinary proceedings under Part XIV of the Act in cases of a breach of other price stabilising rules;
- (c)
proceedings under Part XXV of the Act (Injunctions and Restitution) in relation to market abuse or a breach of other price stabilising rules.
- (a)
- (2)
The FSA and, if necessary, the Financial Services and Markets Tribunal and the court will need, in such cases, to consider whether, and if so how, the overseas stabilising rule has been complied with or broken in relation to conduct of the kind which otherwise would be proscribed under section 397(3) of the Act.
The provisions in this section are separate and distinct from other provisions in these rules which may be relevant to overseas stabilisation whether by persons who are authorised in the United Kingdom or by other persons. In particular, MAR 2.6.4R enables overseas agents appointed by a UK authorised stabilising manager to obtain the benefit of the price stabilising rules.