Price Stabilisation Module (PRS) [VER7/04-18]
PRS 1 PRS 1 Introduction
PRS 1.1 PRS 1.1 Price Stabilisation Rules
PRS 1.1.1 PRS 1.1.1
Rulesconstitute the prescribed Price Stabilisationrequirements for the purposes of Article 64(1) of the Markets Law 2012.
PRS 1.1.1 Guidance1. The
Rulesin PRS prescribe the circumstances in which Price Stabilisationof an Eligible Securityis permitted and the conditions which attach to such conduct.2. The Rulesin PRS are designed to protect market integrity by helping to maintain an orderly market for Eligible Securities(thereby avoiding volatility and market disruption) and enhance market confidence.3. These Rulesoperate as a defence from the Market Misconductprovision set out in Article 54 of the Markets Law 2012. The Market Misconductprovisions are relevant to any conduct which may affect DIFCmarkets or users of DIFCmarkets. Prima facie, the stabilisation of a price of a Securityis market manipulation. However, Article 64(1) provides limited statutory relief for the initial period of trading. This defence is available, in relation to Eligible Securities, to a Personwho can demonstrate that his behaviour is in accordance with these Rulesand does not constitute Market Misconduct.
PRS 1.2 PRS 1.2 Interpretation and other modules
PRS 1.2 Guidance1. Chapter 6 of GEN applies to those to whom this module (PRS) applies. These sections provide, amongst other things, rules to be applied in the interpretation of this and other modules of the
DFSA Rulebook.2. The Glossary module (GLO) also applies to those to whom this module (PRS) applies.3. The matters mentioned above do not in any way limit or otherwise alter the application of any module of the Rulebookto any Personto whom PRS applies. For example the MKT module applies to, among others, Issuers.
PRS 1.3 PRS 1.3 Application
This module (PRS) applies to every
Personto whom the Markets Law 2012 applies and to the same extent in relation to every such Personas that Law, except to the extent that a provision of PRS provides for a narrower application.
PRS 1.4 PRS 1.4 Price Stabilisation
PRS 1.4.1(1) For an activity to constitute
Price Stabilisationit must be an activity:(a) of a type described in PRS chapter 2;(b) conducted within the period covered by the Stabilisation Windowin (2);(c) by a Personspecified in (3);(d) in accordance with PRS; and(e) which might reasonably have, or be intended to have, the effect of stabilising the price of the Eligible Securitieswhich have been admitted to trading on an Authorised Market Institution.(2) The period covered by the Stabilisation Windowis the period beginning on the date of admission to trading of the Eligible Securitieson an Authorised Market Institutionand ending no later than thirty days thereafter.(3) The Personconducting Price Stabilisationmust be the Stabilisation Manageror any of his Stabilisation Agents.(4) Price Stabilisationmay be carried out either on or off the central order book of the relevant Authorised Market Institution.
PRS 2 PRS 2 Price Stabilisation
PRS 2.1 PRS 2.1 Application
This chapter applies to a
Stabilisation Managerand to any Stabilisation Agentsappointed by him.
PRS 2.2 PRS 2.2 Permitted Price Stabilisation
PRS 2.2.1 PRS 2.2.1(1) A
Stabilisation Managerand, if applicable, his Stabilisation Agentsmay in respect of Eligible Securities:(a) purchase, or agree to purchase, such Eligible Securities; or(b) offer or attempt to do anything in (a) with a view to stabilising the Market Priceof such Eligible Securities.(2) A Stabilisation Managerand, if applicable, his Stabilisation Agentsmust not, when engaging in an activity described in (1), in respect of Shares, Certificatesover Shares, Warrantsover Shares, and Unitsthat are shares representing the rights or interests of Unitholdersin a Fund, conduct such activity at a price higher than the Offer Price.
PRS 2.2.2 PRS 2.2.2
Stabilisation Managerand his Stabilisation Agentsmay, in respect of Eligible Securities:(a) make allotments of a greater number of the Eligible Securitiesthan were offered (“over-allotment”);(b) sell or agree to sell the Eligible Securitiesin order to establish a short position in them;(c) buy or agree to buy the Eligible Securitiesin order to close out or liquidate any position that has been established by Price Stabilisationunder (a) or (b);(d) sell or agree to sell the Eligible Securitiesin order to close out or liquidate any position that has been established by Price Stabilisationunder (a) or (b); or(e) offer or attempt to do anything permitted by (a), (b), (c), and (d).
PRS 2.2.2 Guidance
Any over-allotment permitted by PRS Rule 2.2.2(a) must meet the following criteria:(a)
Eligible Securitiesmay be over-allotted only during the Offerperiod and at the Offer Price;(b) the over-allotment option may be exercised by the beneficiaries of such an option only where Eligible Securitieshave been over-allotted;(c) the over-allotment option may not amount to more than 15% of the original Offer;(d) the exercise period of the over-allotment option must be the same as the Stabilisation Window; and(e) the exercise of the over-allotment option must be disclosed to the market promptly, together with all appropriate details, including in particular the date of exercise and the number and nature of Eligible Securitiesinvolved.
PRS 2.2.4 PRS 2.2.4
For the purposes of PRS Rule 2.2.2, an 'over-allotment option' means an option granted by the
Issuerin favour of the Stabilisation Managerand/or his Stabilisation Agentsinvolved in the Offerfor the purpose of covering over-allotments, under the terms of which such Stabilisation Manageror his Stabilisation Agentsmay purchase up to a certain amount of Eligible Securitiesat the Offer Priceduring the Stabilisation Window.
PRS 2.2.4 Guidance
Stabilisation Managermay also often be the lead manager in respect of the same offer and therefore can over-allot Eligible Securitiesin the initial allocation and then facilitate the stabilisation by purchasing Eligible Securitiesduring the Stabilisation Window. A Stabilisation Managerand his Stabilisation Agentsmay also sell short on the market to facilitate stabilisation or in order to close out or liquidate positions established by Price Stabilisation.[Amended] DFSA RM70/2010 (Made 11th July 2010). [VER3/07-10]
PRS 3 PRS 3 Appointment of Stabilisation Manager and Agents
PRS 3.1 PRS 3.1 Application
This chapter applies to an
Issuerand its Stabilisation Managerand is of relevance to any appointed Stabilisation Agent.
PRS 3.2 PRS 3.2 Appointment
Issuerwho intends to carry out Price Stabilisationof its Eligible Securitiesmust:(a) appoint in writing a Stabilisation Manager;(b) notify the DFSAof the appointment, including the name and business address of the Stabilisation Manager, the date of the commencement of the appointment and an address for service in the DIFC of the Stabilisation Manager; and(c) prior to the appointment of the Stabilisation Manager, take reasonable steps to ensure that the Stabilisation Managerhas the required skills, resources and experience to conduct the functions of a Stabilisation Manager.
PRS 3.2.2(1) An
Issuermust notify the DFSAimmediately if the appointment of the Stabilisation Manageris to be terminated, or on the resignation of its Stabilisation Manager, giving the reasons for the cessation of the appointment.(2) An Issuermust appoint a Stabilisation Managerto fill any vacancy in relation to the occurrence of an event specified in (1) and ensure that the replacement Stabilisation Managercan serve as such at the time the vacancy arises or as soon as reasonably practicable.
PRS 3.2.3(1) Where a
Stabilisation Managerappointed by an Issueris not suitable in the opinion of the DFSA, or where a Stabilisation Managerhas not been appointed, the DFSAmay direct the Issuerto replace or appoint a Stabilisation Managerin accordance with the requirements in this chapter.(2) The procedures in Schedule 3 to the Regulatory Law apply to a decision of the DFSAunder (1). The DFSA must give both the Issuer and, if in the DFSA'sopinion the Stabilisation Manageris not suitable, the Stabilisation Manageran opportunity to make representations under those procedures.(3) If the DFSAdecides to exercise its power under (1), the Issueror the Stabilisation Managermay refer the matter to the FMT for review.
PRS 3.3 PRS 3.3 Terms of appointment for a Stabilisation Manager
The terms of appointment of a
Stabilisation Managermust include at least the following information:(a) the period of the Stabilisation Window;(b) the Offer Price;(c) whether the Stabilisation Managerhas discretion to commence Price Stabilisationat the Offer Price;(d) whether the Stabilisation Manageris permitted to appoint Stabilisation Agentsfor the Price Stabilisation;(e) a term whereby the Stabilisation Manageragrees unconditionally to submit to the jurisdiction of the DFSAand the DIFCCourts in relation to the activities of the Stabilisation Managerand his Stabilisation Agentsin carrying out Price Stabilisation; and(f) any other information that the Stabilisation Managerbelieves it will reasonably need to conduct Price Stabilisationeffectively.
PRS 3.4 PRS 3.4 Terms of appointment for a Stabilisation Agent
PRS 3.4.1(1) The
Stabilisation Managermay appoint in writing one or more Stabilisation Agentsto assist him in conducting Price Stabilisation.(2) The terms of appointment of a Stabilisation Agentmust not create a legal relationship other than that of principal and agent whereby the Stabilisation Manageras principal is responsible and liable for any acts carried out by his Stabilisation Agent.
PRS 3.5 PRS 3.5 Restrictions on transactions with Stabilisation Agents
PRS 3.5.1 PRS 3.5.1(1) The
Stabilisation Managermust not during the Stabilisation Windowenter into a transaction as principal with any of his Stabilisation Agentsin the Eligible Securitieswhich are the subject of Price Stabilisation.(2) The requirement in (1) does not apply:(a) if at the time of the transaction, neither the Stabilisation Managernor his Stabilisation Agentknew or could reasonably have known the identity of his counterparty; or(b) where the transaction between the Stabilisation Managerand his Stabilisation Agentis undertaken solely for the purpose of reallocating the risk of positions that were taken by the Stabilisation Managerand his Stabilisation Agentin the course of Price Stabilisationand the transaction is priced accordingly.
PRS 3.5.1 Guidance
Some participants in the
Price Stabilisationmay have accrued positions during stabilisation and PRS Rule 3.5.1 permits transactions to 'square-off' the positions between participants. The terms on which these transactions may be carried may often be agreed in the terms of engagement between the Stabilisation Managerand his Stabilisation Agents. The DFSAmay when inspecting records kept relating to stabilisation seek the rationale for any of these transactions and the price at which they were conducted.
PRS 4 PRS 4 General Conditions
PRS 4.1 PRS 4.1 Application
This chapter applies to an
Issuerand its Stabilisation Managerand any appointed Stabilisation Agent.
PRS 4.2 PRS 4.2 General conditions relating to the carrying out of Price Stabilisation
PRS 4.2.1 PRS 4.2.1(1) For
Price Stabilisationto occur an Issuerof the relevant Eligible Securitiesmust ensure that a prominent statement appears in the Prospectusor other offering document which clearly states that the Offerof Securitiesmay be subject to Price Stabilisationand also identifies by name the Stabilisation Manager.(2) For the purpose of (1), "prominent" means that the statement must appear under its own separate heading in the first few pages of a Prospectusor other offering document.(3) The existence and principal terms of any option or right to purchase the Eligible Securitieswhich are the subject of the Price Stabilisationfrom the Issuer, must be disclosed in the relevant Prospectusor other offering document.
PRS 4.2.1 Guidance1. The existence of any
Stabilisation Agentsdoes not have to be disclosed.2. The following is an example of the wording of a statement under Rule 4.2.1(1) (this does not include the disclosure required under Rule 4.2.1(3));
"In connection with this [issue][offer], [name of Stabilisation Manager] may over-allot or effect transactions with a view to supporting the market price of [description of relevant Securities] at a level higher than that which might otherwise prevail for a limited period after the issue date. However, there may be no obligation on [name of Stabilisation Manager] [or any of his agents] to do this. Such stabilising, if commenced, may be discontinued at any time, and will be brought to an end after a limited period."
PRS 4.2.2(1) A
Stabilisation Managermust not conduct, or permit his Stabilisation Agentto conduct, any Price Stabilisationunless:(a) the requirements of PRS Rule 4.2.1 are fulfilled;(b) the Authorised Market Institutionor other exchange on which the Eligible Securitiesare admitted to trading have been informed that Price Stabilisationin those Eligible Securitiesmay take place during the Stabilisation Windowand that any requirements been complied with; and(c) there are systems and controls in place to ensure compliance with PRS.(2) A Stabilisation Managermust establish a register of Price Stabilisationand take reasonable steps to satisfy himself that the mechanisms required to update the register are in place.
Stabilisation Managermust not conduct, nor allow his Stabilisation Agentto conduct, Price Stabilisationin any case where:(a) the Market Priceof the Eligible Securitiesis falsely higher than the price which would otherwise prevail; and(b) the Stabilisation Managerknows or ought reasonably to have known that the falsity in the Market Pricewas attributable in whole or in part to any conduct by a Personwho was in breach of the Market Misconductprovisions; or(c) any requirements of an Authorised Market Institutionor any other exchange have not been complied with.
PRS 4.3 PRS 4.3 Post Price Stabilisation Disclosure
PRS 4.3.1 PRS 4.3.1
Stabilisation Managerhas conducted Price Stabilisationduring the Stabilisation Window, then he must, within 2 business days following a Price Stabilisationtransaction, disclose to the DFSAthe following details:(a) the total number of Eligible Securitiestransacted by the Stabilisation Managerand any Stabilisation Agents;(b) the average price of Eligible Securitiestransacted during the Price Stabilisation;(c) whether a Price Stabilisationtransaction was undertaken otherwise than through the central order book of the relevant Authorised Market Institution;(d) if the Stabilisation Managerhas an outstanding short position, the number of Eligible Securitiesin that short position; and(e) any additional information which the DFSArequires the Stabilisation Managerto disclose.
PRS 4.3.1 Guidance
PRS Rule 4.3.1 requires a
Stabilisation Managerto disclose to the DFSAdetails of each Price Stabilisationtransaction conducted during the Stabilisation Window. The purpose of this Ruleis to provide the DFSAwith an understanding of the level of price support afforded to the Eligible Securitiesduring the Stabilisation Windowand the manner in which Price Stabilisationoccurred.
PRS 4.3.2 PRS 4.3.2
Stabilisation Managerhas conducted Price Stabilisationduring the Stabilisation Window, then he must within 2 business days following the end of the Stabilisation Windowdisclose to the market the following details:(a) the total number of Eligible Securities bought by the Stabilisation Managerand any Stabilisation Agentsduring the Stabilisation Windowand the date of the first and last stabilisation transactions;(b) the average price of Eligible Securities bought on market during the Stabilisation Window;(c) whether a Price Stabilisationtransaction was undertaken otherwise than through the central order book of the relevant Authorised Market Institution;(d) if the Stabilisation Managerhas an outstanding short position, the number of Eligible Securitiesin that short position; and(e) any additional information which the DFSArequires the Stabilisation Managerto disclose.
PRS 4.3.2 Guidance
PRS Rule 4.3.2 requires a
Stabilisation Managerto disclose to the market details of the Price Stabilisationsupport conducted during the Stabilisation Window. The purpose of this Ruleis to provide the market with an understanding of the level of price support afforded to the Eligible Securitiesduring the Stabilisation Window.
PRS 5 PRS 5 Register
PRS 5.1 PRS 5.1 Application
This chapter applies to a
Stabilisation Managerand is of relevance to his Stabilisation Agents.
PRS 5.2 PRS 5.2 The creation and maintenance of the Register
Stabilisation Managermust, before carrying out any Price Stabilisation:(a) create a register to record the details relating to the Price Stabilisationas required by this chapter; and(b) establish and implement systems and controls to keep the register updated.
PRS 5.2.2 PRS 5.2.2
Stabilisation Managermust ensure that the register contains either on a real-time or daily updated basis the following information:(a) the names and contact details of all Stabilisation Agentsappointed by him;(b) details of the appointment of each Stabilisation Agent, including the date of the appointment;(c) the general terms and instructions (including details of the price floor and Stabilisation Window) determined by the Stabilisation Managerfor his Stabilisation Agentsand the date and time of the communication, variation or revocation of that information and instructions;(d) details of all correspondence passing between the Stabilisation Managerand his Stabilisation Agentrelating to the Price Stabilisation, including all instructions and variations or revocation of appointments;(e) each and every transaction undertaken by the Stabilisation Managerand Stabilisation Agentin the course of the Price Stabilisation, including not but limited to the following transaction details:(i) the type of Eligible Securities;(ii) the price;(iii) the size;(iv) whether the transactions were undertaken on or off the central order book of the relevant Authorised Market Institution;(v) the date and time;(vi) details of the counterparty (if known); and(vii) details of the allotment of the Eligible Securities.
PRS 5.2.2 Guidance1. PRS Rule 5.2.2 (e) (vi) acknowledges that some market structures, for example anonymous order books or anonymous indications of interest, cause the identity of counterparties to sometimes be unknown prior to the effecting of transactions.2. PRS Rule 5.2.2 also accepts that some participants in the
Price Stabilisationmay have accrued uneconomic positions during stabilisation and therefore permits a single transaction, probably at the end-of day, to 'square-off' the positions between participants. The terms on which these transactions be carried may often be agreed in the terms of engagement between the Stabilisation Managerand his Stabilisation Agents. The DFSAmay when inspecting records kept relating to stabilisation seek the rationale for any of these transactions and the price at which they were conducted.
PRS 5.2.3 PRS 5.2.3
Stabilisation Managermust keep the register in the English language and keep it in a location that would allow for it, or a certified copy, to be available within a reasonable time to any person permitted by these Rulesto inspect it.
PRS 5.2.3 Guidance
Reasonable time generally means no more than three business days from the time of request.
The following persons are permitted to inspect the register upon written request:(1) the
DFSA;(2) the Authorised Market Institutionupon which the relevant Securitiesare traded; and(3) any other person that the DFSAconsiders appropriate.
Stabilisation Windowand within three months from the end, the Stabilisation Managermust, on any business day, permit the Issuerof the Eligible Securitiesto which this chapter applies to inspect that part of the register kept in accordance with PRS Rule 5.2.2(e).
Stabilisation Managermust keep the register for a period of six years from the end of the Stabilisation Window.
PRS 6 PRS 6 Dual-Listings and Price Stabilisation Activities
PRS 6.1 PRS 6.1 Application
PRS 6.1.1 PRS 6.1.1(1) This chapter applies to a
Personwho carries out Price Stabilisationof dual-listed Eligible Securities.(2) For the purposes of (1), "dual-listed Eligible Securities” are Eligible Securitieswhich are listed concurrently on an Authorised Market Institutionand on an exchange in a jurisdiction other than the DIFC.
PRS 6.1.1 Guidance
Eligible Securities” in PRS Rule 6.1.1(2) would, in relation to one listed security, include Certificates(e.g. global depository receipts) and Warrantsover the other listed security.
PRS 6.2 PRS 6.2 Price Stabilisation in the DIFC
PRS 6.2.1 PRS 6.2.1(1) Subject to (2), a
Personwho conducts Price Stabilisationof dual-listed Eligible Securitiesin the DIFCmust comply with PRS.(2) A Personwho conducts Price Stabilisationin the DIFC of dual-listed Eligible Securitiesmay, where the non- DIFCjurisdiction is a Recognised Jurisdictionand where the prior consent of the DFSAhas been obtained, conduct such Price Stabilisationin accordance with the law of that Recognised Jurisdiction.(3) The DFSAmay give its consent to the conduct of a Price Stabilisationreferred to in (2) if it is satisfied that the jurisdiction is a Recognised Jurisdictionand that the Price Stabilisationwill be carried out in accordance with the law of that Recognised Jurisdiction.(4) The DFSAmay refuse to give its consent if it is not satisfied as to the matters referred to in (3).(5) The DFSAmay attach conditions to the consent under this Rule.(6) The procedures in Schedule 3 to the Regulatory Law apply to a decision of the DFSAunder (4) to refuse to give its consent or under (5) to attach conditions to the consent.(7) If the DFSAdecides to exercise its power under (4) to refuse to give its consent or under (5) to attach conditions to the consent, the Person may refer the matter to the FMTfor review.
PRS 6.2.1 Guidance
Ruleallows a Personwho is acting as a Stabilisation Managerin respect of a dual-listing of Eligible Securitiesto rely on this chapter or on the laws of Recognised Jurisdictionto conduct those activities. The Ruleis designed to provide Stabilisation Managerswith some limited flexibility in respect of their activities in the DIFC, so long as those activities are adequately regulated.
PRS 6.3 PRS 6.3 Price Stabilisation from the DIFC
PRS 6.3.1 PRS 6.3.1(1) A
Personwho conducts, from the DIFC, Price Stabilisationof dual-listed Eligible Securitieson an exchange outside the DIFCmust:(a) ensure that such Price Stabilisationis conducted in accordance with the law of that non- DIFC Jurisdiction; and(b) provide the DFSAadequate prior notification of such Price Stabilisation.
PRS 6.3.1 Guidance
Ruleallows a Personwho is acting as a Stabilisation Managerin respect of a dual-listing of Eligible Securitiesto rely on the laws of another jurisdiction to conduct those activities outside the DIFC. The Ruleis designed to provide Stabilisation Managerswith some limited flexibility in respect of their activities.