October 2009

Response to HM Treasury’s consultation on notifying trading suspensions in the market

The Exchange has responded to HM Treasury’s consultation on notifying trading suspensions in the market. Broadly, we are supportive of HM Treasury’s proposed use of RISs to disseminate information on the suspension of financial instruments from trading, as this would facilitate the suspension of OTC trading, which is not currently possible for practicable reasons.

The key messages conveyed in our response are as follows:

• The use of different types of services through which institutions will receive instructions to suspend and restore trading could lead to information asymmetry.
• If the FSA were to specify a realistic time period within which it would expect firms to suspend and restore trading, when it instructs them to do so “immediately”, it would avoid the potential for regulatory arbitrage.
• In order to maximise transparency and fairness across the market, we would suggest that written notices, warning notices and decision notices should only be sent after an RIS announcement has been released to the market as a whole.
• We would like to understand how the FSA will ensure that trading venues and publication mechanisms will prevent trades from being reported in suspended securities.
• We would also like to understand what mechanisms will be put in place to facilitate the approval of OTC trading in suspended securities.

Downloads
Response to HM Treasury’s consultation on notifying trading suspensions in the market (file pdf - 1 MB)