Securities Markets (Market Manipulation) Regulations 2007
Securities Markets (Market Manipulation) Regulations 2007: revoked, on 1 December 2014, by section 5(j) of the Financial Markets (Repeals and Amendments) Act 2013 (2013 No 70).
Reprint
as at 1 December 2014
Securities Markets (Market Manipulation) Regulations 2007
(SR 2007/373)
Anand Satyanand, Governor-General
Order in Council
At Wellington this 3rd day of December 2007
Present:
His Excellency the Governor-General in Council
Securities Markets (Market Manipulation) Regulations 2007: revoked, on 1 December 2014, by section 5(j) of the Financial Markets (Repeals and Amendments) Act 2013 (2013 No 70).
Note
Changes authorised by subpart 2 of Part 2 of the Legislation Act 2012 have been made in this official reprint.
Note 4 at the end of this reprint provides a list of the amendments incorporated.
These regulations are administered by the Ministry of Business, Innovation, and Employment.
Pursuant to section 49D(1) of the Securities Markets Act 1988, His Excellency the Governor-General, acting on the advice and with the consent of the Executive Council and on the recommendation of the Minister of Commerce made after consultation with the Securities Commission, makes the following regulations.
Contents
7 Period of market stabilisation
10 Appointment of stabilisation manager
11 Stabilisation manager must notify registered exchange and Financial Markets Authority that market stabilisation to begin
12 Duties and responsibilities of stabilisation manager
14 Price of stabilisation bids: before any trades
15 Price of stabilisation bids: after trades
16 Stabilisation manager must keep daily record of trading
17 Stabilisation manager’s report to registered exchange
Part 2
Short selling and crossings
Regulations
1 Title
These regulations are the Securities Markets (Market Manipulation) Regulations 2007.
2 Commencement
These regulations come into force on 29 February 2008.
Part 1
Market stabilisation
3 Interpretation
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(1) In this Part, unless the context otherwise requires,—
Act means the Securities Markets Act 1988
independent bid means a bid by a buyer who is not—
(a) the stabilisation manager; or
(b) any person acting on behalf of, or in association with, the stabilisation manager
IPO means the first offer for sale to the public of the securities
issuer means the issuer or offeror of the securities
market means the registered exchange’s securities market on which the securities are listed
market stabilisation means the process of stabilising the market for securities offered under an IPO
offer document—
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(a) means—
(i) the registered prospectus in respect of the IPO; and
(ii) the investment statement in respect of the IPO; or
(b) if an exemption has been granted under the Securities Act 1978 from the requirement of a prospectus and investment statement, means the principal offer document that complies with the exemption
offer price means the price of the securities set under the IPO
over-allotment means the allotment of additional securities by the issuer at the option of the stabilisation manager
securities means the securities (as defined in paragraphs (a) and (b) of the definition of security in section 2(1) of the Act) that are listed on a registered exchange’s securities market and to which the market stabilisation relates
stabilisation agreement means the agreement referred to in regulation 9
stabilisation bid means a bid by the stabilisation manager for the purpose of the market stabilisation
stabilisation manager means the person appointed in accordance with regulation 10
stabilisation trade means a trade resulting from a stabilisation bid
trade means a completed buy and sell transaction.
(2) Any term or expression that is defined in the Act and used, but not defined, in this Part has the same meaning as in the Act.
Regulation 3(1) market: amended, on 24 November 2009, by section 23(2) of the Securities Markets Amendment Act 2009 (2009 No 54).
Regulation 3(1) securities: amended, on 24 November 2009, by section 23(2) of the Securities Markets Amendment Act 2009 (2009 No 54).
4 Exemption
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(1) Market stabilisation that complies with each of the requirements set out in regulations 5 to 18 is not market manipulation for the purposes of section 11 or 11B of the Act.
(2) For this exemption to apply, the market stabilisation must comply with each of the requirements set out in regulations 5 to 18 for the whole of the period of the market stabilisation.
5 Prohibited purpose
The market stabilisation must not—
(a) have the purpose of raising the price of the securities, except for the limited objective of stabilising the market in the securities; or
(b) be undertaken with the intention of creating a false or misleading market or impression of trading.
6 Size of IPO
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(1) At the close of the IPO, the total value of the IPO must not be less than $30 million.
(2) In subclause (1), total value—
(a) means the total value of the IPO when all payments, including any payments on instalment, are received by the issuer; but
(b) does not include payment under any over-allotment.
7 Period of market stabilisation
The market stabilisation is limited to the period of 30 days beginning with the first day on which the securities are available for trading on the market.
8 Disclosure by issuer
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(1) The issuer must make the following disclosures before market stabilisation begins:
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(a) the issuer must disclose in each offer document—
(i) the nature and anticipated effect of the market stabilisation; and
(ii) whether over-allotment has been agreed and, if so, the limit of the over-allotment; and
(b) the issuer must include with each offer document other than an investment statement a copy of the stabilisation agreement.
(2) The issuer’s obligation of disclosure under this regulation is discharged only if the issuer makes disclosure in a way that provides clear and meaningful information to prospective investors.
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9 Stabilisation agreement
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(1) Before the IPO opens, the issuer must enter into a stabilisation agreement with the registered exchange and with the stabilisation manager appointed under clause 10.
(2) The terms of the agreement must include the following:
(a) the terms and conditions stipulated by the registered exchange for the technical conduct of the market stabilisation; and
(b) an undertaking by the issuer to comply with those terms and conditions.
(3) The issuer must not breach the undertaking referred to in subclause (2)(b).
10 Appointment of stabilisation manager
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(1) The issuer must appoint a stabilisation manager, and must notify the stabilisation manager’s name and contact details to the registered exchange.
(2) A person (A) may be appointed the stabilisation manager only if, before the appointment is made,—
(a) A has in place a Chinese wall to the satisfaction of the Financial Markets Authority; and
(b) the Financial Markets Authority has notified the issuer and the registered exchange that it is so satisfied.
(3) In subclause (2), Chinese wall means an internal information barrier and other necessary procedures to—
(a) confine confidential information relating to the market stabilisation and the securities to those of A’s officer, employees, or agents (including any broker) who are engaged in the market stabilisation; and
(b) prevent that information passing to any other of A’s officers, employees, or agents (including any broker).
Regulation 10(2)(a): amended, on 1 May 2011, by section 84(2) of the Financial Markets Authority Act 2011 (2011 No 5).
Regulation 10(2)(b): amended, on 1 May 2011, by section 84(2) of the Financial Markets Authority Act 2011 (2011 No 5).
11 Stabilisation manager must notify registered exchange and Financial Markets Authority that market stabilisation to begin
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(1) The stabilisation manager must notify the registered exchange and the Financial Markets Authority that the market stabilisation is to begin.
(2) The notice must be given in writing and must be given—
(a) if the market stabilisation begins at the start of a trading day, before the market closes on the previous trading day; or
(b) not less than 3 trading hours before the market stabilisation begins.
(3) The registered exchange must release the notice given under subclause (1) to the market as soon as practicable.
Regulation 11 heading: amended, on 1 May 2011, by section 84(2) of the Financial Markets Authority Act 2011 (2011 No 5).
Regulation 11(1): amended, on 1 May 2011, by section 84(2) of the Financial Markets Authority Act 2011 (2011 No 5).
12 Duties and responsibilities of stabilisation manager
The stabilisation manager must do the following things:
(a) ensure that the market stabilisation complies with these regulations and the terms and conditions of the stabilisation agreement; and
(b) do everything that is required of the stabilisation manager by these regulations.
13 Stabilisation bids
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(1) A stabilisation bid must be made through a registered exchange’s automated trading system.
(2) The stabilisation manager must notify each stabilisation bid to the registered exchange for release to the market at the same time that the bid is made.
(3) A stabilisation bid must be prioritised behind the current highest independent bid.
14 Price of stabilisation bids: before any trades
If there have been no trades in the securities, and there are no current independent bids, a stabilisation bid must not be higher than the offer price.
15 Price of stabilisation bids: after trades
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(1) If there has been a trade in the securities, and there are 1 or more current independent bids, a stabilisation bid must be the lower of the highest current independent bid and the offer price.
(2) If there has been a trade in the securities, but there are no independent bids, the stabilisation bid must not be higher than the lower of the last trade and the offer price.
16 Stabilisation manager must keep daily record of trading
The stabilisation manager must keep a record for each day of trading during market stabilisation that records the following information:
(a) in respect of each stabilisation trade for that day, the quantity, price, and time of the transaction:
(b) for the period of market stabilisation to date, the cumulative total of securities acquired under the market stabilisation.
17 Stabilisation manager’s report to registered exchange
After the close of each trading day during the market stabilisation, and before the start of trading on the next trading day,—
(a) the stabilisation manager must report in writing to the registered exchange the information that is specified in regulation 16 for the day ended; and
(b) the registered exchange must as soon as practicable release that information to the market.
18 Over-allotment
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(1) The over-allotment must not exceed 15% of the total value of the IPO.
(2) For the purposes of subclause (1), the amount of the over-allotment must not be subsequently increased, even if it is less than 15% of the total value of the IPO.
(3) In this regulation, total value has the same meaning as in regulation 6(2).
Part 2
Short selling and crossings
19 Interpretation in this Part
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(1) In this Part, unless the context otherwise requires,—
Act means the Securities Markets Act 1988
crossing, in relation to a transaction in securities, means a transaction where a person acts as—
(a) buyer and seller for that transaction in an agency capacity; or
(b) buyer or seller on one side of that transaction in an agency capacity and as a principal on the other side
short selling means a sale of any security where at the time of the sale—
(a) the seller does not have a presently exercisable and unconditional right to vest the security in the buyer except where the buyer has a conditional agreement to acquire that right before the date required to settle the sale; or
(b) the security being sold has been borrowed and the seller has a presently exercisable and unconditional right to vest the security in the buyer.
(2) Any term or expression that is defined in the Act and used, but not defined, in this Part has the same meaning as in the Act.
20 Exemption for short selling and crossings
Short selling and crossings under the rules of a registered exchange are not market manipulation for the purposes of section 11 or 11B of the Act merely by reason of being short selling or crossings.
Martin Bell,
for Clerk of the Executive Council.
Date of notification in Gazette: 6 December 2007.
Reprints notes
1 General
This is a reprint of the Securities Markets (Market Manipulation) Regulations 2007 that incorporates all the amendments to those regulations as at the date of the last amendment to them.
2 Legal status
Reprints are presumed to correctly state, as at the date of the reprint, the law enacted by the principal enactment and by any amendments to that enactment. Section 18 of the Legislation Act 2012 provides that this reprint, published in electronic form, has the status of an official version under section 17 of that Act. A printed version of the reprint produced directly from this official electronic version also has official status.
3 Editorial and format changes
Editorial and format changes to reprints are made using the powers under sections 24 to 26 of the Legislation Act 2012. See also http://www.pco.parliament.govt.nz/editorial-conventions/
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4 Amendments incorporated in this reprint
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Financial Markets (Repeals and Amendments) Act 2013 (2013 No 70): section 5(j)
Financial Markets Authority Act 2011 (2011 No 5): section 84(2)
Securities Markets Amendment Act 2009 (2009 No 54): section 23(2)