PRICE RIGGING (Sections 275 and 296)

Price rigging occurs when a person in Hong Kong or elsewhere:

1. engages, directly or indirectly, in a wash sale of securities which has the effect of maintaining, increasing, reducing, stabilising, or causing fluctuations in, the price of securities traded on an exchange or through an ATS in Hong Kong; or



2. engages, directly or indirectly, in any fictitious or artificial transaction or device with the intention that, or being reckless as to whether, it has the effect of maintaining, increasing, reducing, stabilising, or causing fluctuations in, the price of securities, or the price for dealings in futures contracts, that are traded on an exchange or through an ATS in Hong Kong.

The same conduct by a person in Hong Kong which affects securities (or, in the case of paragraph 2, securities or futures contracts) traded on an overseas market will also constitute price rigging if such conduct is unlawful in the country in which the relevant market is situated.

A person will have a defence in relation to 1 above (and also where the conduct is in Hong Kong and affects securities traded on an overseas market) if he can establish that the purposes for which the securities were sold or purchased did not include the purpose of creating a false or misleading appearance with respect to the price of securities (Sections 275(4) and 296(5)).