2.  For subsection (3) of section 81 of the Finance Act 1986(1) there shall be substituted the following subsection—

“(3) For the purposes of this section a person is a market maker in stock of a particular kind—

(a)if he—

(i)holds himself out at all normal times in compliance with the rules of The Stock Exchange as willing to buy and sell stock of that kind at a price specified by him, and

(ii)is recognised as doing so by the Council of The Stock Exchange; or

(b)if—

(i)he is an authorised person under Chapter III of Part I of the Financial Services Act 1986(2),

(ii)he carried out the transaction in the course of his business as a dealer in investments, within the meaning of paragraph 12 of Schedule 1 to the Financial Services Act 1986(3), as a principal and in circumstances where that paragraph was applicable for the purposes of that Act,

(iii)he did not carry out the transaction in the course of any activities which fall within paragraph 14 or 16 of Schedule 1 to the Financial Services Act 1986, and

(iv)the stock was not at the time the transaction was carried out dealt in on a recognised investment exchange; or

(c)if—

(i)that person is a European institution, within the meaning of regulation 3 of the Banking Coordination (Second Council Directive) Regulations 1992(4), which carries on investment business, within the meaning of section 1(2) of the Financial Services Act 1986, in the United Kingdom,

(ii)the transaction was carried out by the institution as a principal in the course of its investment business,

(iii)the transaction was not carried out in the course of any activities which fall within paragraph 14 or 16 of Schedule 1 to the Financial Services Act 1986, and

(iv)the stock was not at the time the transaction was carried out dealt in on a recognised investment exchange.”.

(1)

Subsection (3) was previously substituted by S.I. 1988/654.

(3)

The note to paragraph 12 of Schedule 1 was added by S.I. 1988/803.