Market Conduct Information

1. Introduction

Globally, financial regulatory bodies are increasingly focused on market conduct rules across the financial markets and products. Consequently, new financial regulations come into force on an ongoing basis, and most recently through the introduction of Market Abuse Regulation.

It is therefore essential that you, as a client of the DMA group, receive information on and gain insight into which part of the said rules and regulations you are required to comply with. The DMA Group includes SCM DMA (Pty) Ltd, SCM DMA (Mauritius) Limited, Direct Market Access UK Limited, SCMSA Nominees (Pty) Ltd as well as any subsidiaries and affiliates of those entities. Below, you will find an overall description of the rules. You will also find a non-exhaustive list describing situations which you need to avoid as these constitute violations of market rules.

2. Market conduct rules

Regulation of the financial markets and market conduct rules are aimed at ensuring trust and integrity and thus promoting integrated, efficient and transparent markets. Specific rules set forth unacceptable market conduct by prohibiting the abuse of insider information and various forms of market manipulation. The exchanges/trading venues may have specific rules about market disruption so at the end of this document you will find links to the relevant sites. One example of such rules is that some exchanges have specific limits for the size of positions in various derivatives.

Market conduct rules and regulation applies to all individuals and all legal entities; therefore, all market participants are obliged to familiarize themselves with the relevant rules and regulations. It should be noted that the responsibility of complying with the specific rules lies solely with the individual market participant, and i.e. you as our client.

Trading activity is being monitored and any suspicious activity will be investigated by the relevant markets and authorities. The following is a non-exhaustive list of examples of conduct that violate market conduct rules:

•  Taking advantage of price-sensitive non-published information concerning a company in order to make a profit or avoid incurring losses by buying or selling stocks and/derivatives or to attempt to take advantage of the said information in any other way (insider trading).

•  Passing on insider information.

•  Disseminating false or misleading information on circumstances of substantial importance for the
valuation of a security (e.g. a company’s earnings, orders or product pipeline or a general supply shortage).

•  Disseminating false or misleading information, rumors or messages that may influence the price of a security with the intent to exploit the resulting price movement.

•  Entering low-volume purchase orders with successively higher prices to simulate an increased demand amid rising prices (painting the tape).

•  Simultaneously buying and selling the same securities for the account of one and the same beneficial owner to create false or misleading signals regarding the supply of, demand for, or market price of securities (wash trades).

•  To distort liquidity or prices by entering equal but opposite buy and sell orders in the same security by prior mutual agreement between a number of parties (matched orders or daisy chains coordinated among a number of parties).

•  Constricting the market by building up large positions (cornering) or depositing securities with third parties (parking) to distort securities prices (creating a squeeze).

•  Buying or selling securities shortly before the exchange closes with the intent to influence closing prices
(marking the close).

•  Buying or selling securities to move prices (ramping) or keep them at a specific level (e.g. capping, pegging).

•  Influencing commodity prices to give out false or misleading signals regarding the supply of or demand for securities.

• Placing orders but with no intention to execute (Spoofing).

•  Similar to spoofing, market participants “layer” or “bait” other market participants to react and trade with a bona fide order on the other side of the market without intention to trade (Layering).

• Attempting to push down the price of a stock by heavy selling or short selling (bear raiding).

For further information regarding market regulations and practices please make sure and visit the following
exchanges: