MAR 2.2 Purpose
The purpose of this chapter is to provide rules permitting, but also regulating, price support for offers of equities and bonds, including new issues such as initial public offers and offers of securities of the type and class already traded in the market. It prescribes the circumstances in which the stabilising manager and others acting for him are permitted to support the prices of the relevant securities offered for a limited period after the offer. This is to maintain an orderly initial market in the securities offered, and potentially therefore to facilitate new offers and reduce the costs to enterprises involved in the making of new offers of their securities. The stabilising manager and his agents are allowed to exert upward pressure on the price in the cash market, by all means permitted by the price stabilising rules, including by the purchase of relevant securities previously sold short. Under the rules in this chapter, there can be only one stabilising manager in respect of any particular offer.
GENERAL EFFECT OF THE RULES
The general effect of this chapter is to enable the stabilising manager of an offer of securities to enter into the market personally, or through specially appointed agents, to buy or agree to buy securities in order to support (though not to suppress) the market price of the relevant securities being offered. He will, however, be free to do this only if:
- (1)
the stabilising period is still running;
- (2)
he has taken the necessary preliminary steps envisaged by MAR 2.3 and, if applicable, MAR 2.7 (relating to warning the market of the possibility of stabilising action, and records of action taken);
- (3)
the price is not already false at the start of the stabilising period under MAR 2.3.8 G; and
- (4)
the limits set by MAR 2.5 as to the maximum price at which stabilising action may be taken are not exceeded.
During the stabilising period the stabilising manager may do any or all of the following:
- (1)
purchase, or agree to purchase, any of the relevant securities (or associated securities) with a view to supporting the market price of the relevant securities; and
- (2)
offer or attempt to do anything in (1) with a view to supporting the market price of the relevant securities.
But the stabilising manager will not be able to rely on the price stabilising rules if, at the time of the relevant act or omission, he knew or should reasonably have known that:
- (1)
the market had not been properly informed in accordance with MAR 2.3.2 G(1) and (2); or
- (2)
proper records are obliged to be but have not been or are not being kept in accordance with MAR 2.3.2 R (3); or
- (3)
the price of any associated securities or of the relevant securities was already false at the time when the offer price was determined in the circumstances described at MAR 2.3.8 G.