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Financial Markets Conduct Act 2013

Dealing in financial products on markets - Market manipulation

266: Exception for short selling and crossings

You could also call this:

"Selling financial products you don't own, or buying and selling at the same time, is allowed in some cases"

Illustration for Financial Markets Conduct Act 2013

If you are selling financial products on a licensed market, you do not break the rules in section 262 or 265 just because you are short selling or doing crossings. You might be wondering what short selling and crossings mean. Short selling is when you sell a financial product that you do not own, or you have borrowed it.

When you do a crossing, you are acting as both the buyer and seller of a financial product, or you are acting for one side of the deal and also selling or buying it yourself. This can happen when you are working for someone else, like a company, and you are helping them buy or sell financial products. You can still do these things on a licensed market without breaking the rules in section 262 or 265.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM4091374.

Topics:
Money and consumer rights > Banking and loansBusiness > Industry rulesBusiness > Fair trading
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265: False or misleading appearance of trading, or

"Don't fake how well financial products are selling to trick people into buying or selling them."

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267: Persons treated as contravening false or misleading appearance of trading prohibition, or

"Breaking rules by making fake trades to trick people"

Part 5Dealing in financial products on markets
Market manipulation

266Exception for short selling and crossings

  1. Short selling and crossings under the business rules of a licensed market do not contravene section 262 or 265 merely by reason of being short selling or crossings.

  2. In this section,—

    crossing, in relation to a transaction in financial products, means a transaction where a person acts as—

    1. buyer and seller for that transaction in an agency capacity; or
      1. buyer or seller on one side of that transaction in an agency capacity and as a principal on the other side

        short selling means a sale of any financial product where, at the time of the sale,—

        1. the seller does not have a presently exercisable and unconditional right to vest the financial product in the buyer except where the seller has an unconditional agreement to acquire that right before the date required to settle the sale; or
          1. the financial product being sold has been borrowed and the seller has a presently exercisable and unconditional right to vest the product in the buyer.

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