Qatar Financial Markets Authority Issues Code of Market Conduct

The Qatar Financial Markets Authority has issued the Code of Market Conduct governing transactions among dealers in the Qatari financial markets in line with the Authority's strategic objectives to develop the financial market and boost the confidence of participants in it.

The issuance of this Code comes within the framework of the Qatar Financial Markets Authority's endeavors to achieve the objectives of maintaining confidence in the financial markets trading system, protecting securities owners and dealers, stabilizing the financial markets, and reducing any concomitant risks.

Such code comes within the framework of the Authority's legislations issued to regulate financial market activities with a view to promoting the values of fairness, competitiveness and transparency among financial market dealers, as well as educating investors in general about the accepted ethics and Code of conduct in the market, and how to avoid malpractices, illicit dealings and illegal activities.

The provisions of this Code apply to any deceptive or misleading act or conduct in accordance with the provisions of the Authority's legislations. The illustrations included in the Code are only examples of prohibited acts and behaviors in the market.

The Code of Market Conduct is the first legislation of its kind issued by the Authority and addressed to all ordinary investors and traders.

According to the code, promoting the purchase of a security for the purpose of selling it or to enable another person to sell it, and promoting the sale of a security for the purpose of buying it or to enable another person to buy it, constitutes manipulation or misleading actions that would give or likely to give a false or misleading impression regarding the supply of or demand for a security.

It is also considered manipulation or misleading that would give or likely to give a false or misleading impression regarding the supply or demand for a security, entering orders to buy or sell a security with the purpose of creating a false impression about the size of demand or supply, entering a large number of orders, updating orders, or canceling orders for a security with the purpose of misleading investors, or making it more difficult to identify real orders in the orders' register.

It is also considered manipulation or misleading actions that may give or are likely to give a false or misleading impression of the existence of trading activity in a security or a request to buy or sell it, conducting trading transactions that result in the transfer of ownership of the security between the accounts of the same person or accounts managed by the same person or between colluding parties with the purpose of creating a false impression about the actual trading volume, and conducting transactions or issuing orders on a security with the purpose of creating a false impression about trading in the security.

The Code of Market Conduct sets that Entering one or more purchase orders to support the price of a security with the purpose of executing one or more sell orders, and canceling the purchase orders after executing the sell order; Entering one or more orders to buy or sell a security without really intending to execute the orders by canceling them after their partial execution and doing so repeatedly; and Conducting transactions on the same security by a liquidity provider licensed to practice the activity of a market maker for the account of the liquidity provider and for the account of the market maker, are considered manipulation or misleading actions that may give or are likely to give a false or misleading impression of the existence of trading activity in a security or a request to buy or sell it.

According to the code, the following conducts constitute manipulation or misleading actions that would fix the price or create an artificial price for a security in a manner that gives or is likely to give a false or misleading impression: Buying or selling a security at the opening or closing of a trading session or at the end of any quarterly, semi-annual or annual reference period, with the purpose of controlling the level of the reference price or creating an artificial reference price to mislead investors; Entering or executing orders to buy a security at prices that increase successively, or in a pattern of successively increasing prices; Entering or executing orders to sell a security at successively decreasing prices, or in a pattern of successively decreasing prices; Entering or executing orders of an individual, or colluding individuals, with the purpose of controlling the supply, demand, or price of a security; Executing one or more orders to buy or sell a security repeatedly with the purpose of influencing its price; Collusion of subscribers who were allocated securities during the initial offering in order to purchase other shares of the security as soon as it starts trading in the market with the purpose of creating an unreal price or deceiving investors into believing that there is a high demand for it with the purpose of selling their subscribed shares; Entering or executing one or more orders to buy or sell a security with the purpose of keeping the price within artificial price limits; and Executing one or more orders of an individual or colluding individuals on a security or securities with the purpose of manipulating the market indicators.

In contrast, the Code does not consider the following conducts as manipulation or misleading actions: The company's buyback of its own shares in accordance with the provisions of the legislations issued in this regard; The brokerage company's execution of purchase orders for shares as part of the price stabilization mechanism if conducted in accordance with the legislations issued in this regard; The market maker's purchase or sale of securities in accordance with the legislations issued in this regard; The liquidity provider's purchase or sale of securities in accordance with the legislations issued in this regard; and Trading operations that are carried out with the purpose of buying or selling the listed security within short intervals of time but without the intention of manipulation in terms of affecting the volume of trading in the security or affecting the price.