Statute Details
- Title: Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Notes) (No. 14) Regulations 2005
- Act Code: SFA2001-S143-2005
- Type: Subsidiary Legislation (SL)
- Enacting Authority: Monetary Authority of Singapore (MAS)
- Authorising Act: Securities and Futures Act (SFA) (Cap. 289), specifically section 337(1)
- Citation: SL 143/2005
- Commencement: 23 March 2005
- Status: Current version (as at 27 March 2026)
- 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. 14) Regulations 2005 (“Stabilising Action Exemption Regulations”) is a targeted regulatory instrument that creates a specific exemption from certain market conduct restrictions under the Securities and Futures Act (SFA). In essence, it allows specified parties to engage in “stabilising action” in relation to a particular issuance of convertible subordinated notes without falling foul of the SFA provisions that would otherwise regulate or prohibit such conduct.
Stabilising action is a common feature of securities markets, particularly around the time of issuance. When new securities are issued, market makers or arrangers may take steps to support or maintain the trading price to reduce volatility and improve orderly trading. However, because such activity can resemble conduct that regulators seek to control (for example, actions that could affect market price or mislead investors), the SFA imposes restrictions. This subsidiary legislation carves out a narrow exemption for stabilising activity in respect of a defined set of notes, within a defined time window, and for defined categories of investors or persons.
Practically, the Regulations do not create a general permission to stabilise any security. Instead, they are tightly scoped: they define the exact “Notes” (the Sino Gold Limited 7-year 5.75% fixed rate convertible subordinated notes due March 2012), define who may take stabilising action (Barclays Bank PLC or related corporations), and limit the exemption to stabilising actions taken within 30 days from the date of issue, and only in relation to dealings with specified persons (as referenced in the SFA) or sophisticated investors.
What Are the Key Provisions?
Section 1: Citation and commencement provides the formal citation and states that the Regulations come into operation on 23 March 2005. This matters for compliance timing: stabilising activities must be assessed against the law in force at the relevant time, particularly where the exemption is tied to a post-issue period.
Section 2: Definitions is central because the exemption is only as broad as its defined terms. The Regulations define two key concepts:
- “Notes” means the 7-year 5.75% fixed rate convertible subordinated notes due March 2012 issued by Sino Gold Limited for a principal amount of up to US$35 million, which are convertible into ordinary shares in Sino Gold Limited.
- “stabilising action” means an action taken in Singapore or elsewhere by Barclays Bank PLC (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 practitioner’s perspective, these definitions impose three compliance constraints. First, the exemption is limited to the specific instrument (the Sino Gold notes). Second, the stabilising actor is limited to Barclays Bank PLC and its related corporations. Third, the conduct must be directed to stabilising or maintaining market price, and it includes not only actual purchases but also offers or agreements to purchase.
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, with dealings involving either:
- (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.
While the extract provided does not reproduce the text of SFA sections 197 and 198, the structure indicates that those sections impose restrictions on market conduct that would otherwise capture stabilising purchases. The exemption therefore functions as a “regulatory safe harbour” (though not necessarily a complete immunity from all regulatory scrutiny) for stabilising action that falls within the specified parameters.
Key practical points in Section 3:
- Time-limited: the stabilising action must occur within 30 days from the date of issue. This is a bright-line compliance requirement. If stabilising purchases occur outside the 30-day window, the exemption would not apply.
- Counterparty-limited: the exemption applies only where the stabilising action is taken “with” a person in section 274 or with a sophisticated investor. This implies that the exemption is not meant to facilitate stabilising activity across the board with all market participants; rather, it is tied to dealings with particular categories of investors.
- Instrument-limited: the exemption is only for stabilising action “in respect of any of the Notes” as defined. Any attempt to extend the exemption to other securities would be legally risky.
Finally, the enacting signature (“Made this 17th day of March 2005”) and the MAS designation underscore that this is a formal legislative instrument, not a mere guidance note. For counsel, that means the exemption should be interpreted strictly according to its text and definitions.
How Is This Legislation Structured?
The Regulations are structured as a short, three-section instrument:
- Section 1 (Citation and commencement): identifies the Regulations and sets the commencement date.
- Section 2 (Definitions): defines “Notes” and “stabilising action,” which are essential to the scope of the exemption.
- Section 3 (Exemption): provides the substantive relief from SFA sections 197 and 198, subject to time and counterparty conditions.
Notably, there are no additional schedules or detailed procedural requirements in the extract. The operative compliance analysis therefore turns on whether the stabilising activity fits within the defined “stabilising action,” concerns the defined “Notes,” occurs within the 30-day period, and involves the relevant categories of persons or sophisticated investors.
Who Does This Legislation Apply To?
The exemption is directed at stabilising action taken by Barclays Bank PLC or its related corporations in relation to the defined Sino Gold notes. In other words, the primary regulated entity in practice is the stabilising actor (the market participant conducting the stabilising purchases or purchase commitments).
However, the exemption is also conditioned on the nature of the counterparty or dealing context: stabilising action must be taken “with” a person referred to in section 274 of the SFA or with a sophisticated investor under section 275(2). Accordingly, the Regulations matter not only to the stabilising bank, but also to issuers, arrangers, and legal teams structuring the distribution and trading arrangements to ensure that stabilising activity is conducted within the permitted investor categories.
Why Is This Legislation Important?
This subsidiary legislation is important because it enables a controlled form of market support during a securities issuance while preserving the SFA’s broader market conduct framework. Without such an exemption, stabilising purchases—particularly those that could influence price—might be treated as prohibited or restricted conduct under the SFA. The Regulations therefore support market efficiency and orderly trading, while still limiting the exemption to a specific instrument, a specific stabilising actor, and a narrow time window.
For practitioners, the key significance lies in risk management. Counsel advising on convertible note issuances must consider whether any stabilising activity is contemplated, who will conduct it, where it will occur (Singapore or elsewhere), and how long it will last. Section 3’s 30-day limitation is a common compliance trap: stabilisation often begins around pricing and may continue as the market finds equilibrium. If the stabilising programme is not carefully monitored, activity could drift beyond the exemption period.
Additionally, the counterparty condition (section 274 persons or sophisticated investors) requires careful documentation. Even if stabilising purchases are executed by the correct stabilising entity, the exemption may not apply if the dealings are not with the relevant investor categories. This makes investor classification and dealing records essential. In practice, legal teams should ensure that the distribution and trading mechanics align with the SFA definitions and that internal compliance controls can evidence the basis for investor categorisation.
Related Legislation
- Securities and Futures Act (Cap. 289): In particular, sections 197, 198, 274, 275(2), and the regulation-making power in section 337(1).
- Futures Act (not directly quoted in the extract, but referenced in the provided metadata context).
- Stabilising Act (referenced in the provided metadata context).
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. 14) Regulations 2005 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the official text for authoritative provisions.