Jurisdiction(s):
United Kingdom

Related legal acts

Key definition

Stabilisation definition

What does Stabilisation mean? In capital markets practice, stabilisation is post‑offer price‑support activity by the underwriters (the stabilising manager) to reduce volatility in a new issue of shares. It is commonly implemented via an over‑allotment or “Greenshoe” option, allowing the bank to create a short position and buy shares in the market to support the price and/or to cover that short. In the UK, stabilisation is defined in article 3(2)(d) of the UK Market Abuse Regulation (UK MAR) as purchases or equivalent transactions undertaken by a credit institution or investment firm, in the context of a significant distribution, solely to support the market price for...

UK pre-Market Abuse Regulation stabilisation regime (to 2 July 2016): offences, FCA safe harbours, disclosure, price limits and greenshoe and overallotment conditions

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Practice notes

ARCHIVED: This Practice Note has been archived and is not maintained.

This Practice Note examines how Stabilisation operated in the UK before 3 July 2016 (when the Market Abuse Regulation took effect), covering, in particular, possible offences associated with stabilisation activities in that period, the available Safe harbour protections and how they applied, together with the relevant obligations under the Buy-back and Stabilisation Regulation, and the Financial Conduct Authority’s (FCA) price stabilising provisions contained within its Market Conduct Sourcebook (MAR), among other matters. For guidance on stabilisation from 3 July 2016, see Practice Note: Stabilisation—from 3 July 2016 (Market Abuse Regulation), which explains the position under MAR. This note, together with related materials on the UK stabilisation framework before the Market Abuse Regulation, is kept for reference purposes only and reflects the law as at 2 July 2016. When equity securities are made available to the public via an initial public offer (IPO) or a follow-on offer, attention is given to fixing the offer price at a level that mirrors true market demand at the time. An IPO or secondary offer is often judged successful where the securities trade within a band close to their offer level in the market...

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Web page updated on 22/05/2026

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