(This note is not part of the Order)
Section 123 of the Financial Services and Markets Act 2000 (c. 8) (“the Act”) gives the Financial Services Authority power to impose penalties or publish statements in cases of market abuse. Section 118 of the Act defines market abuse as behaviour, meeting conditions set out in section 118(1) and (2), which occurs in relation to a qualifying investment traded on a market to which section 118 applies. This Order prescribes (in article 4) the markets to which section 118 applies, and (in article 5) the investments which are qualifying investments in relation to those markets.
Article 4 prescribes, as markets to which section 118 applies, markets established under the rules of a UK recognised investment exchange. This is defined in article 3 as meaning any investment exchange recognised under section 290(1)(a) of the Act (which covers recognition of investment exchanges whose head office or registered office is in the UK). Investment exchanges (other than overseas investment exchanges) which are recognised under section 37 of the Financial Services Act 1986 (c. 60) will be given recognition under section 290(1)(a) of the Act by virtue of the transitional provisions contained in regulation 9 of the Financial Services and Markets Act 2000 (Recognition Requirements for Investment Exchanges and Clearing Houses) Regulations 2001 (S.I.2001/995). At the time of making this Order the exchanges in this category were the exchanges known as: COREDEAL, the International Petroleum Exchange, Jiway, the London International Financial Futures Exchange (LIFFE), the London Metal Exchange, OM London Exchange, the London Stock Exchange, and virt-X.
Article 5 prescribes the qualifying investments by reference to section 22 of the Act. The effect is that the market abuse regime in Part VIII of the Act applies to the same range of investments (if they are traded on a prescribed market) as is relevant in determining whether the general prohibition in section 19 of the Act applies. At the time of making this Order, the relevant investments were those set out in Part III of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 (S.I.2001/544), which covers a wide range of financial investments, including debt instruments, shares, government and public securities, and derivatives. Under section 118(6) of the Act the behaviour which is to be regarded as occurring in relation to qualifying investments includes behaviour which occurs in relation to anything which is the subject matter of (or whose price or value is expressed by reference to the price or value of) qualifying investments, or if it occurs in relation to investments whose subject matter is qualifying investments.