(1)For the purposes of this Act, market abuse is behaviour (whether by one person alone or by two or more persons jointly or in concert)—
(a)which occurs in relation to qualifying investments traded on a market to which this section applies;
(b)which satisfies any one or more of the conditions set out in subsection (2); and
(c)which is likely to be regarded by a regular user of that market who is aware of the behaviour as a failure on the part of the person or persons concerned to observe the standard of behaviour reasonably expected of a person in his or their position in relation to the market.
(2)The conditions are that—
(a)the behaviour is based on information which is not generally available to those using the market but which, if available to a regular user of the market, would or would be likely to be regarded by him as relevant when deciding the terms on which transactions in investments of the kind in question should be effected;
(b)the behaviour is likely to give a regular user of the market a false or misleading impression as to the supply of, or demand for, or as to the price or value of, investments of the kind in question;
(c)a regular user of the market would, or would be likely to, regard the behaviour as behaviour which would, or would be likely to, distort the market in investments of the kind in question.
(3)The Treasury may by order prescribe (whether by name or by description)—
(a)the markets to which this section applies; and
(b)the investments which are qualifying investments in relation to those markets.
(4)The order may prescribe different investments or descriptions of investment in relation to different markets or descriptions of market.
(5)Behaviour is to be disregarded for the purposes of subsection (1) unless it occurs—
(a)in the United Kingdom; or
(b)in relation to qualifying investments traded on a market to which this section applies which is situated in the United Kingdom or which is accessible electronically in the United Kingdom.
(6)For the purposes of this section, the behaviour which is to be regarded as occurring in relation to qualifying investments includes behaviour which—
(a)occurs in relation to anything which is the subject matter, or whose price or value is expressed by reference to the price or value, of those qualifying investments; or
(b)occurs in relation to investments (whether qualifying or not) whose subject matter is those qualifying investments.
(7)Information which can be obtained by research or analysis conducted by, or on behalf of, users of a market is to be regarded for the purposes of this section as being generally available to them.
(8)Behaviour does not amount to market abuse if it conforms with a rule which includes a provision to the effect that behaviour conforming with the rule does not amount to market abuse.
(9)Any reference in this Act to a person engaged in market abuse is a reference to a person engaged in market abuse whether alone or with one or more other persons.
(10)In this section—
“behaviour” includes action or inaction;
“investment” is to be read with section 22 and Schedule 2;
“regular user”, in relation to a particular market, means a reasonable person who regularly deals on that market in investments of the kind in question.
Commencement Information
I1S. 118 wholly in force at 1.12.2001; s. 118 not in force at Royal Assent see s. 431(2); s. 118(3)(4)(10) in force at 25.2.2001 by S.I. 2001/516, art. 2(a), Sch. Pt. 1; s. 118 in force so far as not already in force at 1.12.2001 by S.I. 2001/3538, art. 2(1)
Valid from 01/07/2005
(1)Behaviour is to be taken into account for the purposes of this Part only if it occurs—
(a)in the United Kingdom, or
(b)in relation to —
(i)qualifying investments which are admitted to trading on a prescribed market situated in, or operating in, the United Kingdom,
(ii)qualifying investments for which a request for admission to trading on such a prescribed market has been made, or
(iii)in the case of section 118(2) and (3), investments which are related investments in relation to such qualifying investments.
(2)For the purposes of subsection (1), as it applies in relation to section 118(4) and (8), a prescribed market accessible electronically in the United Kingdom is to be treated as operating in the United Kingdom.
(3)For the purposes of section 118(4) and (8), the behaviour that is to be regarded as occurring in relation to qualifying investments includes behaviour which—
(a)occurs in relation to anything that is the subject matter, or whose price or value is expressed by reference to the price or value of the qualifying investments, or
(b)occurs in relation to investments (whether or not they are qualifying investments) whose subject matter is the qualifying investments.
(4)For the purposes of section 118(7), the dissemination of information by a person acting in the capacity of a journalist is to be assessed taking into account the codes governing his profession unless he derives, directly or indirectly, any advantage or profits from the dissemination of the information.
(5)Behaviour does not amount to market abuse for the purposes of this Act if—
(a)it conforms with a rule which includes a provision to the effect that behaviour conforming with the rule does not amount to market abuse,
(b)it conforms with the relevant provisions of Commission Regulation (EC) No 2273/2003 of 22 December 2003 implementing Directive 2003/6/EC of the European Parliament and of the Council as regards exemptions for buy-back programmes and stabilisation of financial instruments, or
(c)it is done by a person acting on behalf of a public authority in pursuit of monetary policies or policies with respect to exchange rates or the management of public debt or foreign exchange reserves.
(6)Subsections (2) and (3) cease to have effect on 30 June 2008.
Valid from 01/07/2005
For the purposes of this Part an insider is any person who has inside information—
(a)as a result of his membership of an administrative, management or supervisory body of an issuer of qualifying investments,
(b)as a result of his holding in the capital of an issuer of qualifying investments,
(c)as a result of having access to the information through the exercise of his employment, profession or duties,
(d)as a result of his criminal activities, or
(e)which he has obtained by other means and which he knows, or could reasonably be expected to know, is inside information.
Textual Amendments
F1Ss. 118-118C substituted (1.7.2005) for s. 118 by The Financial Services and Markets Act 2000 (Market Abuse) Regulations 2005 (S.I. 2005/381), regs. 1(2), 5, Sch. 2 para. 1
Valid from 01/07/2005
(1)This section defines “inside information” for the purposes of this Part.
(2)In relation to qualifying investments, or related investments, which are not commodity derivatives, inside information is information of a precise nature which—
(a)is not generally available,
(b)relates, directly or indirectly, to one or more issuers of the qualifying investments or to one or more of the qualifying investments, and
(c)would, if generally available, be likely to have a significant effect on the price of the qualifying investments or on the price of related investments.
(3)In relation to qualifying investments or related investments which are commodity derivatives, inside information is information of a precise nature which—
(a)is not generally available,
(b)relates, directly or indirectly, to one or more such derivatives, and
(c)users of markets on which the derivatives are traded would expect to receive in accordance with any accepted market practices on those markets.
(4)In relation to a person charged with the execution of orders concerning any qualifying investments or related investments, inside information includes information conveyed by a client and related to the client's pending orders which—
(a)is of a precise nature,
(b)is not generally available,
(c)relates, directly or indirectly, to one or more issuers of qualifying investments or to one or more qualifying investments, and
(d)would, if generally available, be likely to have a significant effect on the price of those qualifying investments or the price of related investments.
(5)Information is precise if it—
(a)indicates circumstances that exist or may reasonably be expected to come into existence or an event that has occurred or may reasonably be expected to occur, and
(b)is specific enough to enable a conclusion to be drawn as to the possible effect of those circumstances or that event on the price of qualifying investments or related investments.
(6)Information would be likely to have a significant effect on price if and only if it is information of a kind which a reasonable investor would be likely to use as part of the basis of his investment decisions.
(7)For the purposes of subsection (3)(c), users of markets on which investments in commodity derivatives are traded are to be treated as expecting to receive information relating directly or indirectly to one or more such derivatives in accordance with any accepted market practices, which is —
(a)routinely made available to the users of those markets, or
(b)required to be disclosed in accordance with any statutory provision, market rules, or contracts or customs on the relevant underlying commodity market or commodity derivatives market.
(8)Information which can be obtained by research or analysis conducted by, or on behalf of, users of a market is to be regarded, for the purposes of this Part, as being generally available to them.]
Textual Amendments
F1Ss. 118-118C substituted (1.7.2005) for s. 118 by The Financial Services and Markets Act 2000 (Market Abuse) Regulations 2005 (S.I. 2005/381), regs. 1(2), 5, Sch. 2 para. 1