Financial Services and Markets Act 2000 (c. 8)

Valid from 08/06/2010

[F1 Part 8A U.K. Short selling

Textual Amendments

F1 Pt. 8A inserted (8.6.2010) by Financial Services Act 2010 (c. 28), ss. 8, 26(2)(b)

Short selling rules U.K.

131B Short selling rules U.K.

(1) The Authority may make rules prohibiting in specified cases persons from engaging in short selling in relation to relevant financial instruments (or relevant financial instruments of a specified description).

(2) The Authority may make rules requiring—

(a) a person who has engaged in short selling in relation to relevant financial instruments (or relevant financial instruments of a specified description), or

(b) an authorised person of a specified description who has acted on behalf of such a person,

to disclose in specified cases specified information, or information of a specified description, about the short selling.

(3) Rules under subsection (2) may specify the time by which, and the way in which, the disclosure must be made (and may in particular provide for the information to be disclosed to the Authority or published in a specified way).

(4) Rules under subsection (2) may apply in relation to short selling engaged in before the rules are made where the resulting short position is still open when the rules are made.

(5) The reference to a short position being open is to be read in accordance with provision made by the rules.

(6) Rules under this section may apply to short selling wholly outside the United Kingdom by persons outside the United Kingdom, but only in so far as the rules relate to UK financial instruments.

(7) The description of relevant financial instruments that may be specified by the rules includes relevant financial instruments issued by a specified person.

(8) Rules under this section are referred to in this Part as “short selling rules”.

(9) The Authority must, when making short selling rules, have regard to any international agreement as to measures to be taken in respect of short selling.

131C Short selling rules: definitions etc U.K.

(1) This section supplements section 131B.

(2) The cases in which a person (“S”) engages in short selling in relation to a financial instrument (a “shorted instrument”) include any case where—

(a) S enters into a transaction which creates, or relates to, another financial instrument; and

(b) the effect (or one of the effects) of the transaction is to confer a financial advantage on S in the event of a decrease in the price or value of the shorted instrument.

(3) “Financial instrument” has the meaning given by Article 4.1(17) of the markets in financial instruments directive.

(4) “Relevant financial instrument” means a financial instrument that—

(a) is admitted to trading on a regulated market or on any other prescribed market in an EEA State; or

(b) has such other connection with a market in an EEA State as may be specified.

(5) “Specified” means specified by short selling rules.

(6) “UK financial instrument” means a financial instrument that is admitted to trading on a market in the United Kingdom.

(7) In the case of a financial instrument that is admitted to trading on—

(a) a market in the United Kingdom or another EEA State, and

(b) one or more markets in a country or territory, or countries or territories, anywhere else in the world,

short selling rules may apply in relation to trading on both or all markets.

(8) In any case where—

(a) a financial instrument (“instrument A”) is admitted to trading on a market in the United Kingdom or another EEA State,

(b) another financial instrument (“instrument B”) is admitted to trading on one or more markets in a country or territory, or countries or territories, anywhere else in the world, and

(c) the price or value of instrument A depends on the price or value of instrument B (or vice versa),

short selling rules may apply in relation to trading on both or all markets.

(9) In subsection (4)(a) “regulated market” has the meaning given by Article 4.1(14) of the markets in financial instruments directive.

(10) References in this section to a market in a country or territory are to a market situated or operating in the country or territory.

131D Short selling rules: procedure in urgent cases U.K.

(1) The Authority may make short selling rules (and may subsequently amend those rules) without complying with section 155 (consultation in relation to proposed rules) if it considers that it is necessary to do so, in order to—

(a) maintain confidence in the UK financial system; or

(b) protect the stability of the UK financial system.

(2) Any rules made by virtue of subsection (1) (“emergency rules”) cease to have effect at the end of the period of three months beginning with the day on which the rules are made (“the relevant day”); but this is subject as follows.

(3) The Authority may direct that emergency rules are to cease to have effect at the end of a period (not exceeding six months beginning with the relevant day) specified in the direction.

(4) A direction under subsection (3) may be made only if, immediately before the end of the period mentioned in subsection (2), the Authority considers that it is necessary to do so, in order to—

(a) maintain confidence in the UK financial system; or

(b) protect the stability of the UK financial system.

(5) Such a direction must be published by the Authority in the way appearing to the Authority to be best calculated to bring it to the attention of the public.

(6) Nothing in subsection (2) or (3) prevents the Authority from revoking emergency rules before the end of the periods referred to there.]