General Decree on the Extension of the Provisions of the General Decrees of the Federal Financial Supervisory Authority (BaFin) of 19 and 21 September 2008 (expired by the end of 31 January 2010)
1.The provisions under items 1. and 2. of the General Decree of BaFin dated 19 September 2008 and the provision under item 1. of the General Decree of BaFin dated 21 September 2008 shall continue to apply until 31 March 2009.
2.This General Decree is issued subject to reservation of revocation pursuant to section 36 (2) Administrative Procedures Act (Verwaltungsverfahrensgesetz – VwVfG).
3.The General Decree shall be deemed announced on the day following the customary announcement.
Grounds:
The Decree is based on section 4 (1) Securities Trading Act (Wertpapierhandelsgesetz – WpHG) according to which BaFin has to counteract undesirable developments which may adversely affect the orderly conduct of trading with financial instruments or the provision of investment services or non-core investment services or which may result in serious disadvantages for the capital market. It may, pursuant to section 4 (1) sentence 3 WpHG, issue orders to eliminate or prevent undesirable developments.
The undesirable developments existing at the time the Decrees of 19 and 21 September 2008 were issued which jeopardise the proper execution of securities trading and the stability of the financial system continue to exist. It is therefore necessary to keep the aforementioned provisions of the Decrees in full force and effect for a further three months. In particular, an unusual volatility continues to be observed in the shares of credit institutions, operators of stock exchanges, insurance companies and other companies from the financial sector which well exceeds that of the respective indices. By influencing the prices of the stocks specified, transactions resulting in a short position or in the increase of a short position (referred to as short selling transactions) in shares within the meaning of no. 1 of the Decree dated 19 September 2008 would, by reason of the importance of the companies for the aggregate economy, reinforce this development and would therefore result in further excessive price movements which might jeopardise the stability of the financial system and thus entail serious disadvantages for the financial market as a whole. In particular, such transactions also carry the risk of exacerbating liquidity shortages by putting pressure on the share prices, thus making it more difficult for the companies to raise capital.
The ban moreover serves to prevent market manipulation by the transactions specified in no. 1 of the Decree dated 19 September 2008. An undesirable development would notably exist if said transactions were used for purposes of market manipulation, e.g. by using the media to spread rumours after previously engaging in such transaction and not having disclosed the resulting conflict of interest (section 20a (1) no. 3 WpHG in conjunction with section 4 (3) no. 2 Market Manipulation Definition Ordinance (Marktmanipulations-Konkretisierungsverordnung – MaKonV)).
The ban is appropriate to prevent and/or counteract the aforementioned undesirable developments and thus to preserve and strengthen the trust of market participants in the effective functioning of the capital market. The chosen duration of its continued validity makes it possible for the companies to plan their securities trading activities with sufficient certainty over a protracted period. A more moderate, equally effective measure cannot be envisaged. The exceptional provisions of the Decrees reasonably take account of the interests of trading participants in the use of hedging instruments so that the restrictions of trading in financial instruments remain limited to the required scope. The reservation of revocation as well as the reservation of requirements being subsequently incorporated, amended or supplemented enables BaFin to respond flexibly to current developments during the period of application of the Decree. This in particular makes it possible to promptly lift the ban in the event of a far-reaching stabilisation of the markets.
Instruction on available remedies
It is possible to object to this Decree within one month of its issuance.
The objection must be submitted in writing or for recording with the
Federal Supervisory Authority
Lurgiallee 12, 60439 Frankfurt am Main,
or
Graurheindorfer Str. 108, 53117 Bonn.