Reserve Bank of India (Prevention of Market Abuse) Directions, 2019
UR
- Applies toAll participants dealing in RBI-regulated financial markets (not trades already done through recognised stock exchanges)
- StatusIn force
- IssuedMar 15, 2019
- Amendmentsnone tracked
- Length29 points in 4 sections · 3 min read
The four dates on this rule
- PublishedMar 15, 2019The day RBI put this document out. This is the same day as the Issued date on this rule.
- Starts to applyMarch 15, 2019The day this rule starts to apply, as RBI's own text states it.
- Time to get readyNoneIt starts to apply on the day it was published.
- Last date to actNot statedNo date to act by was found in this document. Other dates may sit inside single paragraphs.
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What it says
How firm is each point
Stated by RBI — RBI’s own paragraph says this. We have only made it plainer.
Our reading — BankPulse read RBI’s paragraph and shortened it. The paragraph is the authority, not this line.
Needs judgement — RBI leaves this to the bank to settle, so nobody can give you a fixed number here.
Can be read two ways
A point marked this way sits on an RBI paragraph that can honestly be read two ways. Our own sentence takes one of the two. BankPulse does not choose for you: read RBI’s own paragraph, at the number printed on the point, before you act on it.
Two ways — both, or either one. RBI’s paragraph joins two things in the and-or form. One reading: Both of them apply, together. The other: Either one of them, on its own, is enough.
Must know
1. Covers all market dealings
These rules cover all market participants, not trades already done through recognised stock exchanges.
2. What counts as market abuse
Market abuse includes rigging the market, rigging a benchmark, or misusing information.
3. Market manipulation, defined
Market manipulation means giving a false or misleading impression of a financial instrument's price, supply or demand.
4. Market participant, defined
A market participant is anyone who transacts, or helps a transaction happen, in these markets.
5. Price-sensitive customer information, defined
This term means private information about a customer's own trades that is not yet public.
6. Non-public price-sensitive information, defined
This term means information not yet public that could move a financial instrument's price.
7. No manipulating the market
A market participant must not rig, or try to rig, the market.
8. Keep trading platforms working
A market participant must not disrupt or delay an electronic trading platform.
9. No manipulating a benchmark
A market participant must not act, alone or with others, to rig a benchmark or reference rate.
10. No trades to move rates
A market participant must not trade mainly to move a benchmark or reference rate.
11. No using inside information
A market participant holding non-public price-sensitive information must not use it for gain.
12. Keep customer orders confidential
A market participant must not misuse a customer's price-sensitive information, and must keep it private.
13. No false or misleading information
A market participant must not create or pass on false information, or hold back information that must be reported.
14. Careless claims still count
Passing on false information is treated as done on purpose if the market participant did not check it was true.
15. One month barred from markets
RBI may bar a market participant from one or more markets for up to one month at a time.
16. A chance to defend first
RBI must give the market participant a chance to explain before acting against it.
17. Bar orders are made public
Every time RBI bars a market participant this way, it is made public.
Do it
1. Report abuse to RBI promptly
A market participant must promptly tell RBI about any market abuse it detects.
2. Give RBI data on demand
A market participant must give RBI any data it asks for, in the form and time set.
Background
1. In force since March 2019
These rules have applied since 15 March 2019.
2. RBI and government excluded
RBI itself and the government are excluded when acting on monetary, fiscal or other public policy.
3. What counts as a benchmark
A benchmark is any benchmark rate published by FBIL or another agency RBI names.
4. Electronic trading platform, defined
An electronic trading platform takes its meaning from RBI's own 2018 Directions on the subject.
5. Financial instruments, defined by law
Financial instruments are whatever section 45W of the RBI Act names, or lets RBI add.
6. Public means open to all
Information is public when anyone can get it on equal terms, from any source.
7. Recognised stock exchange, defined
A recognised stock exchange takes its meaning from the Securities Contracts (Regulation) Act, 1956.
8. Reference rate, defined
A reference rate is any reference rate FBIL or another RBI-named agency publishes.
9. Transactions include orders and quotes
A transaction includes an order, quote, bid or offer, whether or not it leads to a trade.
10. Undefined terms, RBI Act meaning
Any word this circular does not define takes its meaning from the RBI Act, 1934.