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 (SFA) (notably section 337(1))
- Enacting Authority: Monetary Authority of Singapore (MAS)
- Citation: SL 130/2005
- Commencement: 17 March 2005
- Status: Current version as at 27 March 2026 (per the legislation record)
- Key Provisions: Section 2 (definitions); Section 3 (exemption)
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 terms, it creates a narrow exemption from certain market conduct rules in the Securities and Futures Act (SFA) for a specific kind of market activity—“stabilising action”—carried out in relation to a particular issuance of notes.
Market conduct rules in the SFA are designed to prevent manipulation and to ensure fair dealing in securities markets. However, stabilisation practices are sometimes permitted in regulated contexts because they can support orderly trading and reduce volatility immediately after a new issuance. This set of Regulations does not broadly legalise stabilisation; instead, it carves out an exemption for stabilising action relating to a defined set of “Notes” issued in March 2005, and it limits the exemption to a defined stabiliser and a defined time window.
Practically, the Regulations operate as a “permission slip” for stabilisation activity that would otherwise fall within prohibitions in the SFA. The exemption is time-limited (within 30 days from the date of issue) and investor/participant-limited (stabilising action must be undertaken with certain categories of persons, including persons referred to in section 274 of the SFA or sophisticated investors as defined in section 275(2) of the SFA).
What Are the Key Provisions?
Section 1 (Citation and commencement) provides the short title and commencement date. It states that the Regulations may be cited as the “Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Notes) (No. 11) Regulations 2005” and that they came into operation on 17 March 2005. For practitioners, the commencement date matters because stabilisation activity must be assessed against the law in force at the time the relevant trades or offers were made.
Section 2 (Definitions) is central because the exemption is only as broad as the defined terms. The Regulations define two key concepts:
- “Notes” means 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” means 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.
These definitions are deliberately narrow. The exemption is not a general stabilisation regime for all securities; it is tied to a specific instrument (“Notes”) and a specific stabiliser (J.P. Morgan Securities Ltd. and related corporations). This matters for compliance: if a different entity conducts stabilisation, or if the stabilisation relates to different securities, the exemption may not apply.
Section 3 (Exemption) is the operative provision. It provides that sections 197 and 198 of the Act shall not apply to stabilising action taken in respect of any of the Notes within 30 days from the date of issue, with stabilising action carried out 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.
In plain language, Section 3 removes the risk of breaching the SFA’s market conduct prohibitions (as contained in sections 197 and 198) for stabilisation trades, but only if the stabilisation is (i) within the 30-day post-issuance window, (ii) in relation to the specified Notes, and (iii) conducted with the specified categories of counterparties/investors.
For a practitioner, the most important compliance questions arising from Section 3 are: (1) timing—were the stabilising trades within 30 days from the date of issue?; (2) scope—were the trades in the defined Notes?; (3) identity—was the stabilising action taken by J.P. Morgan Securities Ltd. or its related corporations?; and (4) counterparty category—were the trades made with persons falling within section 274 or with sophisticated investors under section 275(2)?
How Is This Legislation Structured?
The Regulations are structured in a straightforward, short format typical of targeted exemptions. They contain:
- Section 1: Citation and commencement (administrative provisions).
- Section 2: Definitions (sets the boundaries of “Notes” and “stabilising action”).
- Section 3: Exemption (the operative legal effect, specifying which SFA provisions are disapplied and under what conditions).
There are no additional parts or complex schedules in the extract provided. The legal effect is therefore concentrated in Section 3, with Section 2 doing the essential work of limiting the exemption’s reach.
Who Does This Legislation Apply To?
Although the Regulations are made under the SFA and refer to “stabilising action” and defined counterparties, the practical beneficiaries and affected parties are those involved in the stabilisation of the specified notes. The exemption is framed around actions taken by J.P. Morgan Securities Ltd. (or its related corporations) and therefore primarily concerns that stabilising entity and its trading operations.
However, the exemption also depends on the counterparty category. Stabilising action must be taken with either (a) persons referred to in section 274 of the SFA or (b) sophisticated investors under section 275(2). Accordingly, the Regulations indirectly affect issuers, arrangers, and trading desks by constraining the types of counterparties that can be involved if the stabilisation is to remain within the exemption.
Why Is This Legislation Important?
This Regulations is important because it illustrates how Singapore’s market conduct framework balances two competing objectives: preventing market abuse and allowing regulated market practices that can support orderly trading. Stabilisation can be controversial if used to mislead the market. The exemption approach addresses this by making stabilisation permissible only within tightly defined parameters.
From an enforcement and compliance perspective, the exemption is significant because it disapplies specific SFA provisions—sections 197 and 198—but only for stabilising action meeting the conditions in Section 3. This means that outside the exemption’s boundaries, the general prohibitions in the SFA would still apply. A compliance team must therefore treat the exemption as conditional and documentable rather than as a blanket authorisation.
For practitioners advising on capital markets transactions, the Regulations provides a concrete example of how stabilisation is operationalised through subsidiary legislation. It also highlights that stabilisation permissions may be issuance-specific and counterparty-specific. In practice, lawyers should ensure that trading policies, legal opinions, and transaction documentation align with the defined “Notes,” the stabiliser identity, the 30-day window, and the investor/counterparty categories.
Finally, the Regulations underscores the role of MAS in tailoring market conduct exemptions under the SFA. Rather than relying solely on general exemptions, MAS can issue specific regulations for particular instruments and market activities, thereby creating legal certainty for market participants while preserving regulatory control.
Related Legislation
- Securities and Futures Act (SFA) (Cap. 289) — including sections 197, 198, 274, 275(2), and the regulation-making power in section 337(1)
- Futures Act (referenced in the legislation metadata)
- Stabilising Act (referenced in the legislation metadata)
- Legislation Timeline (for version control and amendments tracking)
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.