Statute Details
- Title: Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Notes) (No. 12) Regulations 2005
- Act Code: SFA2001-S131-2005
- Type: Subsidiary Legislation (SL)
- Authorising Act: Securities and Futures Act (Cap. 289)
- Enacting Power: Section 337(1) of the Securities and Futures Act
- Citation: SL 131/2005
- Commencement: 17 March 2005
- Status: Current version as at 27 March 2026 (per provided extract)
- Key Provisions: Section 1 (Citation and commencement), 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. 12) Regulations 2005 (“Stabilising Exemption Regulations”) is a targeted set of subsidiary legislation made under the Securities and Futures Act (the “SFA”). In plain language, it creates a narrow exemption from certain market conduct rules when a specific type of stabilising activity is carried out in relation to a particular bond issuance.
Stabilising action is a common feature of securities offerings. During and shortly after a new issue, market makers or arrangers may take steps to support the trading price and reduce volatility. However, stabilisation can overlap with prohibitions on market manipulation or improper dealing. The SFA contains provisions that regulate market conduct, including restrictions that would otherwise apply to stabilising purchases or offers to buy.
This legislation addresses that tension by carving out an exemption for stabilising actions taken in respect of “Notes” that are precisely identified in the Regulations. It also limits the exemption to stabilising actions taken within a defined time window from the date of issue, and only by specified categories of persons (or in relation to specified investor types). The result is a controlled permission: stabilisation is allowed, but only under conditions that aim to preserve market integrity.
What Are the Key Provisions?
Section 1 (Citation and commencement) provides the legal identity and timing of the Regulations. The Regulations may be cited as the “Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Notes) (No. 12) Regulations 2005” and they came into operation on 17 March 2005. For practitioners, commencement matters because the exemption is time-bound and must be assessed against the date of the relevant stabilising activity and the date of issue of the Notes.
Section 2 (Definitions) is central because the exemption is only as broad as the defined terms. The Regulations define two key concepts: “Notes” and “stabilising action”.
First, “Notes” are defined with high specificity: they are the 7-year guaranteed fixed rate senior notes due March 2012 issued by Titan Petrochemicals Group Limited for a principal amount of up to US$500 million. The Notes are further described as being guaranteed by certain subsidiaries of Titan Petrochemicals Group Limited that are not incorporated in the People’s Republic of China. This level of detail indicates that the exemption is not meant to apply to stabilisation of any notes generally, but only to this particular issuance.
Second, “stabilising action” is defined as an action taken in Singapore or elsewhere by Morgan Stanley & Co. International Limited (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. This definition is important for two reasons. It identifies the stabilising participant (Morgan Stanley & Co. International Limited and related corporations), and it clarifies the purpose of the action (stabilisation/price maintenance). It also covers not only actual purchases but also offers or agreements to buy, which can be relevant for compliance planning and documentation.
Section 3 (Exemption) is the operative provision. It states that Sections 197 and 198 of the SFA shall not apply to any stabilising action taken in respect of any of the Notes, within 30 days from the date of issue of the Notes, with two alternative qualifying categories:
- (a) a person referred to in section 274 of the Act; or
- (b) a sophisticated investor as defined in section 275(2) of the Act.
In practical terms, Section 3 provides that the market conduct restrictions in Sections 197 and 198 are suspended for the specified stabilising activity, but only if the stabilising action is carried out within the 30-day period and involves counterparties falling within the specified categories. For a lawyer advising an arranger, dealer, or issuer, the key compliance tasks are therefore: (i) confirm the Notes match the defined issuance; (ii) confirm the stabilising activity is undertaken by the defined stabiliser; (iii) confirm the timing (within 30 days from issue); and (iv) confirm the relevant counterparty status (section 274 person or sophisticated investor).
Although the extract does not reproduce Sections 197 and 198 of the SFA, the structure of the exemption indicates that those provisions likely impose restrictions on dealing or market conduct that could otherwise capture stabilisation. The exemption is deliberately narrow and conditional, reflecting Singapore’s approach to allowing stabilisation while preventing abuse.
How Is This Legislation Structured?
The Regulations are short and structured around three provisions:
- Section 1 sets out the citation and commencement.
- Section 2 provides definitions that determine the scope of the exemption.
- Section 3 contains the exemption from specified SFA provisions, including the time limit and the qualifying persons/investor category.
There are no separate Parts in the extract, and the Regulations are essentially a bespoke instrument for a particular bond issue. This is typical of stabilisation exemptions: rather than creating a broad general exemption, the law identifies the specific security and the specific stabilising actor, and then grants a limited exemption for a limited period.
Who Does This Legislation Apply To?
The Regulations apply to stabilising actions taken in respect of the defined “Notes” by the defined stabiliser (Morgan Stanley & Co. International Limited and related corporations). However, the exemption’s availability also depends on the identity of the person on the other side of the stabilising dealing (or the investor category involved), because Section 3 requires that the stabilising action be taken with a person referred to in section 274 of the SFA or with a sophisticated investor under section 275(2).
Accordingly, the practical scope includes: (i) the stabilising firm and its related corporations; (ii) persons who qualify under section 274; and (iii) sophisticated investors. Issuers and advisers should also be aware of the exemption because it affects how stabilisation can be conducted legally, but the exemption is drafted to relieve the stabilising action from the SFA provisions rather than to impose direct obligations on the issuer.
Why Is This Legislation Important?
This legislation is important because it enables lawful market stabilisation in a controlled manner. Without such an exemption, stabilising purchases or offers to buy could risk contravening market conduct provisions that are designed to prevent manipulation and improper dealing. By expressly exempting stabilising action from Sections 197 and 198 of the SFA, the Regulations provide legal certainty to the stabilising participant and reduce compliance risk.
For practitioners, the value lies in the precision of the exemption. The Regulations do not offer a generic permission to stabilise any notes. Instead, they define the exact Notes (issuer, instrument type, maturity, guarantee structure, and maximum principal amount) and the exact stabiliser (Morgan Stanley & Co. International Limited and related corporations). They also impose a 30-day window from the date of issue. These constraints are critical when advising on offering documentation, dealing arrangements, and post-issuance trading controls.
Finally, the counterparty limitation (section 274 persons or sophisticated investors) is a compliance fulcrum. Even if the stabiliser and the Notes are correct, the exemption may not apply if the stabilising dealing is conducted with the wrong category of counterparty. Lawyers should therefore ensure that dealing records, investor classifications, and transaction counterparties are properly documented and aligned with the SFA definitions.
Related Legislation
- Securities and Futures Act (Cap. 289) — including Sections 197, 198, 274, 275(2), and the regulation-making power in Section 337(1)
- Futures Act (referenced in provided metadata)
- Stabilising Act (referenced in provided metadata)
- Timeline (legislation timeline referenced in provided 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. 12) Regulations 2005 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the official text for authoritative provisions.