Released 11 March 2005. Comments closed 22 April 2005.

This policy proposal paper outlines our proposed policy on market   stabilisation. This paper is not final ASIC policy.

Market stabilisation is the purchase of, or the offer to purchase, securities for the purpose of preventing, or slowing, any fall in the market price of those securities following an offer of those securities.

An offer of securities often leads to a fall in the price of those securities because of:

• the sudden increase in supply; and/or
• imperfections in the pricing and allocation process.

To counter this effect, the underwriter of the offer may attempt to stabilise the price of the securities by purchasing, or offering to purchase, the securities for a period after the issue or sale of the securities.

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