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Chapter 37

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Question:

What is a "false market"?

Answer:

The term "false market" refers to a situation where there is material misinformation or materially incomplete information in the market which is compromising proper price discovery. This may arise, for example, where:

(a) an issuer has made a false or misleading announcement;
(b) there is other false or misleading information, including a false rumour, circulating in the market;
(c) an issuer has inside information that needs to be disclosed under the Inside Information Provisions but it has not announced the information (e.g. the issuer signed a material contract during trading hours but has not announced the information); or
(d) a segment of the market is trading on the basis of inside information that is not available to the market as a whole.

Where a media or analyst report appears to contain information from a credible source (whether that information is accurate or not) and:

(a) there is a material change in the market price or trading volume of the issuer's securities which appears to be referrable to the report (in the sense that it is not readily explicable by any other event or circumstance); or
(b) if the market is not trading at the time but the report is of a character that when the market starts trading, it is likely to have a material effect on the market price or trading volume of the issuer's securities,

the issuer must announce information necessary to avoid a false market in its listed securities.

FAQ Series 22, FAQ No. 1
LR reference: Main Board Rules 13.09(1), 13.10, 37.47(b); Paragraph 3 of Practice Note 11; Paragraph 2(1)(b) of Appendices 7C, 7D, 7E and 7H; Paragraph 24 of Appendix 7C; Paragraph 26 of Appendix 7H / GEM Rules 17.10(1), 17.11, 30.40(b), 31.04(2)and 31.05
Released on 30/4/2013

Question:

Does an issuer need to "consult" the Exchange before announcing the information necessary to avoid a false market in its securities?

Answer:

No, it can proceed to disclose the information which requires disclosure under these provisions.

However, it must contact the Exchange as soon as reasonably practicable if it believes that there is likely to be a false market in its listed securities (see the note to these provisions).

FAQ Series 22, FAQ No. 2
LR reference: Main Board Rules 13.09(1), 37.47(b); Paragraph 2(1)(b) of Appendices 7C, 7D, 7E and 7H / GEM Rules 17.10(1), 30.40(b), 31.04(2)
Released on 30/4/2013