Stabilizing

Stabilizing is defined in Rule 100 of Regulation M as the placing of a bid or effecting a purchase for the purpose of “pegging, fixing, or maintaining the price of a security.” Rule 104 of Regulation M permits distribution participants under certain conditions to conduct stabilizing transactions that prevent or slow a decline in the market price of a security that is the subject of a distribution, referred to as a covered security. However, Rule 104 provides limits on the prices of stabilizing bids; conditions for initiating stabilizing activity; and requirements for recordkeeping, disclosure, and notification.