The Act provides statutory exceptions for two types of behaviour in relation to the market abuse regime. The first relates to behaviour which is described in this Code as not amounting to market abuse (see MAR 1.1.10 G). The second relates to behaviour which conforms with an FSA rule where that rule includes a provision to the effect that behaviour conforming with that rule does not amount to market abuse (section 118(8) of the Act). In the Code, specific instances of both these exceptions are referred to as 'safe harbours'. In addition, the Act states that information which can be obtained by research or analysis is to be regarded as generally available (section 118(7) of the Act) (see MAR 1.4.5 E).
those parts of the listing rules which relate to the timing, dissemination or availability, content and standard of care applicable to a disclosure, announcement, communication or release of information. These are specified in MAR 1 Annex 1;
The FSA exercises in MAR 1.7.7 C - MAR 1.7.8 C, with the approval of the Treasury, the powers conferred by section 120 of the Act (Provisions included in the Authority's code by reference to the City Code), save that any reference made to the SARs is made under section 119 of the Act and therefore does not require the approval of the Treasury.
These safe harbours apply in relation to behaviour likely to give rise to a false or misleading impression as described in MAR 1.5, and behaviour which would, or would be likely to, give rise to distortion as described in MAR 1.6, but not in relation to behaviour based on the misuse of information as described in MAR 1.4.
The FSA is satisfied that the remainder of the Takeover Code and SARs do not permit or require behaviour which amounts to market abuse. Much of the Takeover Code and the SARs is not directed specifically at the types of behaviour prohibited by the Act; for example, many provisions are directedat ensuring that an offer or stakebuilding is conducted within an orderly framework or that shareholders in a company are treated similarly. Other provisions, such as the rules dealing with the specific content of offeree and offeror documents, are encompassed within the general content standard in Rule 23 of the Takeover Code and have not, therefore, been given a specific safe harbour.
Behaviour conforming with any of the rules of the Takeover Code or SARs in relation to the timing, dissemination or availability, content and standard of care applicable to a disclosure, announcement, communication or release of information, and which rules are specified in MAR 1 Annex 2, does not of itself amount to market abuse in that the behaviour does not give rise to a false or misleading impression (MAR 1.5.4 E) or distortion (MAR 1.6.4 E) in so far as the behaviour is expressly required or expressly permitted by the rule in question, but this is subject to MAR 1.7.10 E.
Behaviour conforming with Rule 4.2 of the Takeover Code (in relation to restrictions on dealings by offeror and concert parties) does not of itself amount to market abuse in that the behaviour does not give rise to a false or misleading impression (MAR 1.5.4 E) or distortion (MAR 1.6.4 E) in so far as the behaviour is expressly required or expressly permitted by that rule, but this is subject to MAR 1.7.10 E.
An example of how MAR 1.7.7 C is intended to work may assist. If the rule in question in the Takeover Code is about timing of an announcement, then the protection of MAR 1.7.7 C is conferred on the behaviour in so far as timing is relevant. However, the method of dissemination, the content and the standard of care will not be protected unless they are respectively in compliance with relevant provisions of the Takeover Code or SARs relating to dissemination, content and standard of care.
Certain provisions of the Takeover Code and of the SARs restrict the commercial freedom of a person by, for example, restricting the speed at which shares can be acquired. However, behaviour in compliance with such provisions will not be regarded as giving a false or misleading impression, as such restrictions will be taken into account in assessing whether behaviour falls below the standard reasonably to be expected.
In cases where none of the safe harbours in MAR 1.7.7 C to MAR 1.7.8 C apply, the regular user may not necessarily consider that complying with applicable requirements of the Takeover Code or the SARs will be sufficient in and of itself to demonstrate that behaviour does not amount to market abuse. An example may help to explain this. If, for example, a person were to comply with Rule 1 of the SARs in building a stake, but his decision to build the stake was based on relevant information and none of the safe harbours in MAR 1.4 applied, that person's behaviour would be likely to amount to market abuse. Nevertheless, the question whether a person has complied with relevant provisions of the Takeover Code and SARs which do not give a safe harbour may be relevant to a regular user's assessment of whether or not that person'sbehaviour has fallen below reasonably expected standards.