Stabilisation—from 3 July 2016 (Market Abuse Regulation)

The following Corporate practice note provides comprehensive and up to date legal information covering:

  • Stabilisation—from 3 July 2016 (Market Abuse Regulation)
  • What is stabilisation?
  • Why is stabilisation activity carried out?
  • What are 'securities'?
  • What are 'associated instruments'?
  • What is a 'significant distribution'?
  • What is an 'investment firm' and a 'credit institution'?
  • Stabilisation—potential offences
  • Market abuse
  • Misleading impressions
  • More...

Stabilisation—from 3 July 2016 (Market Abuse Regulation)

This Practice Note considers the nature and purpose of stabilisation, the process of stabilisation, the potential offences that may arise when carrying out stabilisation and the safe harbour defence under the UK Market Abuse Regulation (Retained Regulation (EU) No 596/2014) and the UK Buy-back and Stabilisation Regulation (Retained Regulation (EU) 2016/1052 supplementing the Market Abuse Regulation with regard to regulatory technical standards for the conditions applicable to buy-back programmes and stabilisation measures). For details of the stamp duty and stamp duty reserve tax implications of a stabilisation transaction see Practice Note: Stamp duty and SDRT implications of stabilisation transactions, including the over-allotment or greenshoe option (a subscription to Lexis®PSL Tax will be required).

What is stabilisation?

Stabilisation is essentially the artificial manipulation of the market price of securities in order to maintain the price at a certain level and achieve a stable market in the securities. This could potentially constitute a number of offences in various jurisdictions, including market abuse under the UK Market Abuse Regulation. However, the UK Market Abuse Regulation expressly provides a safe harbour from claims of market abuse if the stabilisation is carried out in accordance with set rules.

Article 3(2)(d) of the UK Market Abuse Regulation defines stabilisation as:

  1. a purchase or offer to purchase securities, or a transaction in associated instruments equivalent to such securities

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