8 Specific Market Practices
(1) In this Rule, the Regulator sets out some guidance about the application of the Market Abuse provisions to some specific market practices.
Stock lending and collateral
Stock lending and collateral
(2) A stock lending or borrowing transaction or a repo or reverse repo transaction, or a transaction involving the provision of collateral, will, in the Regulator's view, not usually of itself constitute Market Abuse.
Short Selling
Short Selling
(3) Short Selling is ordinarily a legitimate market practice that, in the Regulator's view, will not usually of itself constitute Market Abuse. In certain circumstances however, Short Selling when combined with other additional factors may amount to Market Abuse, for example:
(a) if a person takes a short position in the Shares of a Company and then spreads false rumours about the Company in order to drive down the share price;
(b) if an Insider enters into a Short Sale of a Financial Instrument on the basis of Inside Information; or
(c) if a person enters into a Short Sale of a Financial Instrument without any reasonable possibility of being able to settle the short position.
Price Stabilisation
(4) Price Stabilisation does not constitute Market Abuse if it is carried out in accordance with the Price Stabilising Rules as defined in the FSMR (see Rules 2- 3(3) and 2-3(4) of the RMC).
Market Making
Market Making
(5) The legitimate performance of market making will not usually constitute Market Abuse — see Rules 5-7(2) to 5-7(4) of the RMC.
Other general conduct which may amount to defences to Market Abuse include:
Execution of Client Orders
Other general conduct which may amount to defences to Market Abuse include:
Execution of Client Orders
(6) The execution of an unsolicited Client order if certain conditions are satisfied (see Rules 5-7(8) to 5-7(10) of the RMC).
Underwriting
Underwriting
(7) The legitimate performance of underwriting functions may also not amount to Market Abuse (see Rules 5-7(5) to 5-7(7) of the RMC).