Postboks 100 Bryn
Att.: Linda Bruås
Our ref.: 2001/000410 FJA/MSR
COMMENTS ON THE FESCO CONSULTATION PAPER ON STABILISATION AND ALLOTMENT - SECOND CONSULTATIVE DOCUMENT
FESCOs paper "Stabilisation and Alloment - A European supervisory Approach" (ref FESCO/00-099d) was sent on a national hearing last year. The Norwegian Financial Services Assocation (FNH) expressed its views on the first consultation document in a letter to the Norwegian Banking Insurance and Securities Commission (Kredittilsynet) of 3 November 2000. FNH letter of 27.04.01 to Kredittilsynet with comments on the proposal for harmonization of core conduct of business rules for investor protection, also contained general comments on the regulatory process with regards to the FESCOs attempt to harmonize rules and practice in the European securities market.
As stated in the letter of 3 November 2000, FNH remains supportive to the view that there is a need for common European regulation on stabilization and allotment. Harmonization of legislation through providing a safe harbour for stabilisation activities that will be accepted throughout Europe, will contribute to increased integration in the European market for financial services and give financial institutions operating in this market a common legal framework. FNH therefore welcomes common European regulation on stabilisation and allotment.
It is our opinion that the aim should be an international set of regulations that apply to all participants in these markets, or at least harmonize such regulation as much as possible, in addition to the rules being implemented in all EEA-jurisdictions. Given the participation in such markets from institutions from countries outside the EEA-area, it is in our opinion important that the proposed standards and rules also are compared and accommodated to other regulatory regimes in this field, especially the American regulation, in order to avoid giving European institutions disadvantages in the competition with non-European institutions.
The legal regime in Norway does not contain rules applying directly to stabilisation transactions. The proposed standards and detailed rules in the consultation document thus represent an introduction of new requirements in addition to the present regulation in Norway. Stabilisation transactions may however indirectly be covered by the general prohibition of price manipulation in the Securities Trading Act section 2-6 and the provisions in the Stock Exchange Regulation of 17.01.1994 nr. 30, regarding information requirements and prospectuses. The lack of specific regulation in this field creates an uncertainty for the market participants that may lead to criticism and discussions with regards the legality of the transactions. Introduction of standards regulating stabilisation activities may lead to a higher degree of legal predictability and clearify the regulatory practice in this field.
In the Consultation paper comments are invited on the question of definition of the term "Overallotment". As the term is understood by our member institutions, an overallotment would require an allotment after and in excess of allotment of the original offer. FNH does not have any objections to the material contents of proposed principles for allotment. We would still like to emphasize the importance of keeping the possibility to treat different types of investors in a different manner, as long as all investors are treated fairly and according to objective criterias that are disclosed in the prospectus.
FNH supports the suggestion that the Greenshoe only may be exercised in connection with an Overallotment of relevant securities.
Finance and Legal department