Why did the Panel decide to draft a guidance note on equity derivatives?
The Panel was conscious that equity derivatives were being increasingly used by potential bidders, and by speculators such as hedge funds, in respect to target shares prior to the announcement of, or during, a takeover, both in Australia and overseas. The Panel was concerned that equity derivatives should not be used in ways that undermine the policy of Chapter 6 or avoiding the provisions of Chapter 6-6C. The Panel considered that it would be desirable for it to give some guidance as to when, and in what circumstances, the use of equity derivatives may constitute unacceptable circumstances. Such guidance would also assist bidders and other persons as to measures that they might take to reduce any risk that conduct they take in relation to equity derivatives would give rise to unacceptable circumstances. The Panel emphasised in its discussion document that it does not wish to disrupt, or place unreasonable restrictions on the equity derivative market in Australia. The Panel considers t
