Statute Details
- Title: Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Notes) (No. 11) Regulations 2006
- Act Code: SFA2001-S118-2006
- Type: Subsidiary Legislation (SL)
- Authorising Act: Securities and Futures Act (Cap. 289)
- Power Used: Section 337(1) of the Securities and Futures Act
- Commencement: 27 February 2006
- Key Provisions: Section 2 (definitions); Section 3 (exemption)
- Regulatory Focus: Exemption from market conduct prohibitions for stabilising transactions in specified notes
- Notes Covered: 3-year floating rate notes due February 2009 issued by the Kingdom of Thailand, up to US$200 million
What Is This Legislation About?
The Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Notes) (No. 11) Regulations 2006 (“Stabilising Action (Notes) Regulations”) is a targeted regulatory instrument that creates a narrow exemption from certain market conduct rules in the Securities and Futures Act (the “SFA”). In essence, it allows specified stabilising activities—conducted by a particular financial institution group—in relation to a particular issuance of notes, without triggering the prohibitions that would otherwise apply.
In plain language, the Regulations recognise that, in certain debt capital market transactions, market makers or arrangers may take steps to support liquidity and reduce volatility immediately after issuance. Such steps are commonly referred to as “stabilising action”. However, stabilising conduct can resemble prohibited trading behaviour if the law is applied rigidly. The Regulations therefore carve out a controlled exception, but only for a defined set of notes, a defined stabiliser, and a defined time window.
The scope is deliberately limited. The exemption is not a general permission to stabilise any securities. Instead, it is tied to a specific instrument (Kingdom of Thailand 3-year floating rate notes due February 2009), a specific stabilising actor (Standard Chartered Bank and its related corporations), and a specific period after issuance (within 30 days from the date of issue). It also imposes conditions on who may be involved in the stabilising transactions and, for certain categories of purchasers, a minimum consideration threshold.
What Are the Key Provisions?
Section 1 (Citation and commencement) provides the formal citation and states that the Regulations came into operation on 27 February 2006. This is relevant for practitioners assessing whether stabilising activity occurred within the legal framework and whether the exemption was available at the time of the relevant dealings.
Section 2 (Definitions) is central because it defines the boundaries of the exemption. Three key terms are defined:
- “Notes” are defined with precision: the “3-year floating rate notes due February 2009 issued by Kingdom of Thailand for a principal amount of up to US$200 million”. This definition is both issuer-specific and instrument-specific, and it also includes a cap on the principal amount.
- “securities” takes its meaning from section 239(1) of the SFA. This cross-reference ensures that the exemption operates within the SFA’s broader definitional framework, even though the Regulations themselves are focused on notes.
- “stabilising action” is defined as an action taken in Singapore or elsewhere by Standard Chartered Bank (or 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. The definition is important because it captures not only actual purchases but also offers or agreements to buy—meaning that preparatory or conditional conduct may fall within the exemption if it is part of stabilising activity.
Section 3 (Exemption) 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 one of the specified counterparty categories:
- (a) an institutional investor
- (b) a relevant person as defined in section 275(2) of the SFA
- (c) a person who acquires the Notes as principal, but only if the consideration is not less than $200,000 (or its equivalent in a foreign currency) for each transaction, whether paid in cash or by exchange of securities or other assets
From a practitioner’s perspective, the exemption is best understood as a three-part test:
- Instrument test: the dealings must be in the defined “Notes”.
- Actor and conduct test: the stabilising action must be taken by Standard Chartered Bank or its related corporations, and must be aimed at stabilising or maintaining market price (including offers or agreements to buy).
- Timing and counterparty test: the stabilising action must occur within 30 days from the date of issue, and must be conducted with the permitted categories of counterparties (institutional investors; relevant persons; or principal acquirers meeting the minimum consideration threshold).
Although the Regulations do not reproduce the text of sections 197 and 198 of the SFA in the extract provided, the legal effect is clear: the prohibitions in those sections are suspended for the specified stabilising action. In practice, this means that conduct that would otherwise be unlawful under the SFA’s market conduct regime may be lawful if it falls squarely within the exemption’s conditions.
How Is This Legislation Structured?
The Regulations are short and structured in a conventional format for subsidiary legislation:
- Section 1 sets out the citation and commencement.
- Section 2 provides definitions that delimit the scope of the exemption.
- Section 3 contains the exemption itself, specifying which SFA provisions are disapplied, the time window, the stabilising actor, the notes covered, and the permitted counterparty categories.
There are no additional parts or complex schedules in the extract. The Regulations operate as a focused carve-out rather than a comprehensive regulatory code.
Who Does This Legislation Apply To?
The exemption is designed to benefit the parties who would otherwise be exposed to the SFA’s market conduct prohibitions when engaging in stabilising transactions. However, the Regulations do not apply to “everyone” in a general sense. The stabilising action must be taken by Standard Chartered Bank or its related corporations. Therefore, the principal compliance audience is the Standard Chartered group (and any entities acting on its behalf or within its corporate group) that may undertake stabilising purchases or related commitments.
On the counterparty side, Section 3 limits the exemption to stabilising action conducted with institutional investors, relevant persons, or principal acquirers meeting a minimum consideration threshold of $200,000 per transaction (or equivalent). This means that even if stabilising activity is undertaken by the permitted stabiliser within the 30-day window, the exemption may not apply if the counterparty falls outside the defined categories or if the consideration requirement is not met for principal acquisitions.
Why Is This Legislation Important?
This Regulations is important because it provides legal certainty for stabilising activity in a specific debt issuance. Without such an exemption, stabilising purchases could be argued to fall within prohibited market conduct behaviour under the SFA. By disapplying sections 197 and 198 for qualifying stabilising action, the Regulations reduce regulatory risk for arrangers and market participants involved in the immediate post-issuance period.
For practitioners advising on capital markets transactions, the key practical value lies in the precision of the exemption. It is not enough to know that stabilisation is generally permitted in some jurisdictions; the Singapore position here is conditional. Lawyers must verify:
- the instrument is exactly the defined “Notes” (issuer, tenor, floating rate feature, due date, and principal amount cap);
- the stabilising action is taken by the correct entity (Standard Chartered Bank or related corporations);
- the stabilising conduct is within the defined time window (30 days from the date of issue); and
- the counterparties are within the permitted categories, including the minimum consideration threshold for principal acquirers.
From an enforcement and compliance standpoint, the exemption’s narrow drafting suggests that regulators expect strict adherence. The inclusion of “offer or agree to buy” in the definition of stabilising action also implies that compliance teams should monitor not only executed trades but also commitments and conditional arrangements that may be part of stabilisation strategies.
Related Legislation
- Securities and Futures Act (Cap. 289) — in particular, sections 197, 198, 239(1), 275(2), and the authorising power in section 337(1)
- Futures Act (as referenced in the provided metadata)
- Stabilising Act (as referenced in the provided metadata)
- Timeline / Legislation timeline (for version verification, as indicated in the metadata)
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 2006 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the official text for authoritative provisions.