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Jan 1 2015 onwards

CMC 10 Specific Market Practices



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The definitive version of DFSA handbook text is the PDF version as that is the text of the instrument as made and published by the DFSA.

1. In this section, the DFSAG sets out some Guidance about the application of the Market AbuseG provisions to some specific market practices.

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 DFSA's view, not usually of itself constitute Market AbuseG .

Short selling

3. Short SellingG is ordinarily a legitimate market practice that, in the DFSA's view, will not usually of itself constitute Market AbuseG . In certain circumstances however, Short SellingG when combined with other additional factors may amount to Market AbuseG , 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 InsiderG enters into a Short SaleG of an InvestmentG on the basis of Inside InformationG ; or
(c) if a person enters into a Short SaleG of an InvestmentG without any reasonable possibility of being able to settle the short position.
4. A person engaging in Short SellingG will also need to comply with the requirements of the relevant ExchangeG relating to Short SellingG — see AMI section 6-7.

Price stabilisation

5. Price StabilisationG does not constitute Market AbuseG if it is carried out in accordance with the Price Stabilisation Module — see CMC section 2-4, paragraphs 2 and 3.

Purchase of own shares

6. The purchase by a company of its own shares does not constitute Market AbuseG if it is carried out in accordance with certain conditions — see CMC section 2-4, paragraphs 4 and 5 and CMC section 6-7, paragraph 1(g).

Market making and underwriting

7. The legitimate performance of market making and underwriting functions will not usually constitute Market AbuseG — see CMC section 6-7, paragraphs 2 to 7.

Execution of client orders

8. The execution of an unsolicited client order will not constitute Market AbuseG if certain conditions are satisfied — see CMC section 6-7, paragraphs 8 and 9.
Derived from GM9/2014 (Made 1st January 2015). [VER1/01-15]