Statute Details
- Title: Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Notes) (No. 11) Regulations 2005
- Act Code: SFA2001-S130-2005
- Legislation Type: Subsidiary legislation (SL)
- Authorising Act: Securities and Futures Act (Cap. 289) (“SFA”)
- Enacting Authority: Monetary Authority of Singapore (“MAS”)
- Commencement: 17 March 2005
- Regulation Number: SL 130/2005
- Status: Current version as at 27 March 2026 (per the legislation portal)
- Key Provisions:
- Section 1: Citation and commencement
- Section 2: Definitions (“Notes”, “stabilising action”)
- Section 3: Exemption from sections 197 and 198 of the SFA for stabilising action in respect of specified notes
- Relevant SFA Provisions (as referenced): Sections 197, 198, 274, 275(2)
What Is This Legislation About?
The Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Notes) (No. 11) Regulations 2005 is a targeted regulatory instrument. In plain language, it creates a narrow exemption from certain market conduct restrictions in the Securities and Futures Act for “stabilising action” taken in connection with a specific issuance of notes in March 2005.
Stabilisation is a common market practice in securities offerings. When a new issue is launched, market prices can be volatile. Stabilising activity—typically involving purchases (or offers to purchase) by a designated party—may be undertaken to help maintain orderly trading and reduce abrupt price swings. However, stabilisation can also raise concerns about market manipulation, misleading price signals, and unfair dealing. Singapore’s SFA therefore contains market conduct provisions that generally restrict certain conduct around offerings.
This Regulations package resolves that tension by allowing stabilising action to occur without breaching the relevant SFA sections, but only if strict conditions are met: the stabilising action must relate to the defined “Notes”, must be taken within a specified time window (30 days from the date of issue), and must be carried out with specified categories of counterparties (persons under section 274 of the SFA or “sophisticated investors” under section 275(2) of the SFA). The exemption is thus both purpose-driven and tightly bounded.
What Are the Key Provisions?
1. Citation and commencement (Regulation 1)
Regulation 1 provides the short title and states that the Regulations come into operation on 17 March 2005. For practitioners, this matters because the exemption is time-sensitive: stabilising action must be assessed against the commencement date and, more importantly, the 30-day period from the “date of issue” of the Notes (as set out in Regulation 3).
2. Definitions of “Notes” and “stabilising action” (Regulation 2)
Regulation 2 is crucial because it confines the exemption to a particular transaction and a particular stabilising actor. It defines:
- “Notes” as the fixed rate step-up callable perpetual subordinated notes issued in March 2005 by Chinatrust Commercial Bank Co., Ltd., Hong Kong Branch, for a principal amount of up to US$500 million.
- “stabilising action” as an action taken in Singapore or elsewhere by J.P. Morgan Securities Ltd. (or any of its related corporations) to buy, or to offer or agree to buy, any of the Notes in order to stabilise or maintain the market price of the Notes in Singapore or elsewhere.
From a legal risk perspective, these definitions mean that the exemption is not generic. A party cannot simply rely on “stabilisation” as a concept; it must fit within the defined Notes and the defined stabilising actor. If a different issuer, different instrument, or different stabilising firm is involved, the exemption may not apply.
3. The exemption from sections 197 and 198 of the SFA (Regulation 3)
Regulation 3 is the operative provision. It states that sections 197 and 198 of the SFA shall not apply to stabilising action taken in respect of any of the Notes, within 30 days from the date of issue, provided the stabilising action is taken with either:
- (a) a person referred to in section 274 of the SFA; or
- (b) a sophisticated investor as defined in section 275(2) of the SFA.
Practically, this exemption does two things. First, it removes the application of the specified SFA market conduct restrictions to the stabilising action, thereby reducing the likelihood of regulatory breach for conduct that would otherwise be prohibited. Second, it imposes a counterparty condition: stabilising action must be conducted with eligible counterparties. This is a common regulatory design—stabilisation is permitted, but only in controlled circumstances that reduce the risk of harm to less informed market participants.
4. Time-limited and transaction-specific nature
Although Regulation 3 is short, its legal effect is significant because it is both time-limited and transaction-specific. The 30-day window is a hard constraint. Even if stabilising action is conceptually similar, conduct outside the 30-day period would fall outside the exemption and would need to be assessed under the general SFA market conduct framework.
Similarly, the exemption is tied to the defined Notes issued in March 2005. For counsel advising on compliance, this means the exemption is unlikely to be reusable for later tranches, amendments, or different note series unless a separate exemption is issued.
How Is This Legislation Structured?
This Regulations instrument is structured as a short set of provisions typical of subsidiary legislation granting a narrow exemption. It contains:
- Regulation 1 (Citation and commencement): identifies the instrument and sets the commencement date.
- Regulation 2 (Definitions): defines the scope of “Notes” and “stabilising action”. These definitions are the gatekeepers for whether the exemption can be invoked.
- Regulation 3 (Exemption): sets out the exemption from the SFA’s market conduct provisions, including the 30-day limit and the eligible counterparty categories.
There are no additional parts or complex schedules in the extract provided. The legal architecture is therefore straightforward: define the relevant instruments and conduct, then exempt that conduct from specified statutory provisions under specified conditions.
Who Does This Legislation Apply To?
In terms of persons, the exemption is primarily relevant to the stabilising actor and the counterparties with whom stabilising trades are executed. The definition of “stabilising action” expressly identifies J.P. Morgan Securities Ltd. and its related corporations as the stabilising parties whose actions may qualify.
In terms of counterparties, Regulation 3 requires that stabilising action be taken with either (i) a person referred to in section 274 of the SFA or (ii) a sophisticated investor under section 275(2). While the Regulations do not reproduce those definitions, the practical implication is that the exemption is not intended to facilitate stabilisation with all market participants indiscriminately. Instead, it is limited to counterparties that meet the SFA’s eligibility criteria—typically reflecting a policy judgment that such counterparties are better able to understand risks and market dynamics.
Why Is This Legislation Important?
This Regulations is important because it illustrates how Singapore regulates market conduct while still permitting legitimate market practices. Stabilisation can support orderly trading, but it can also be misused. By exempting stabilising action from specific SFA provisions, MAS provides legal certainty to the designated stabilising firm and its transaction participants—so long as they comply with the defined scope and conditions.
For practitioners, the key value lies in compliance risk management. When advising issuers, arrangers, or stabilising agents, counsel must determine whether the conduct falls within the exemption. The definitions in Regulation 2 and the conditions in Regulation 3 are the critical checklist items: the instrument must be the defined Notes; the stabilising party must be the defined entity; the trades must be for stabilisation/price maintenance; the trades must occur within the 30-day window; and the counterparties must be within the eligible categories.
Enforcement significance also follows from the exemption’s narrowness. If any condition is not met—wrong note series, wrong stabilising firm, trades outside the 30-day period, or trades with ineligible counterparties—then the exemption would not apply. The stabilising conduct would then be subject to the general operation of sections 197 and 198 of the SFA, which are designed to prevent improper market conduct. In other words, the exemption is not a blanket permission; it is a conditional safe harbour.
Related Legislation
- Securities and Futures Act (Cap. 289) — particularly sections 197, 198, 274, and 275(2) (as referenced)
- Futures Act (listed in the metadata timeline context)
- Stabilising Act (listed in the metadata timeline context)
- Legislation Timeline / MAS legislation timeline (for version control and amendment history)
Source Documents
This article provides an overview of the Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Notes) (No. 11) Regulations 2005 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the official text for authoritative provisions.