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CMC 10 Specific Market Practices

1. In this section, the DFSA sets out some Guidance about the application of the Market Abuse 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 Abuse.

Short selling

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

Price stabilisation

5. Price Stabilisation does not constitute Market Abuse 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 Abuse 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 Abuse — 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 Abuse 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]