Statute Details
- Title: Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Notes) (No. 15) Regulations 2004
- Act Code: SFA2001-S225-2004
- Type: Subsidiary Legislation (SL)
- Authorising Act: Securities and Futures Act (Cap. 289) — powers under section 337(1)
- Enacting Authority: Monetary Authority of Singapore (MAS)
- Citation: SL 225/2004
- Commencement: 26 April 2004
- Key Provisions: Section 2 (Definitions); Section 3 (Exemption)
- Relevant Market Conduct Provisions Exempted: Sections 197 and 198 of the Securities and Futures Act
- Stabilising Action Subject Matter: Dealings in specified convertible notes issued by Tata Motors Limited (the “2009 Notes” and “2011 Notes”)
What Is This Legislation About?
The Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Notes) (No. 15) Regulations 2004 (“Stabilising Action Exemption Regulations”) is a targeted regulatory instrument. In plain terms, it creates a limited exemption from certain “market conduct” restrictions in the Securities and Futures Act for stabilising activities carried out in relation to two specific series of convertible notes issued by Tata Motors Limited.
Stabilising action is a practice commonly associated with securities offerings. Market participants may buy (or offer to buy) securities shortly after issuance to help maintain an orderly market price. While stabilisation can support liquidity and price stability, it also raises regulatory concerns because it may affect price discovery. Accordingly, Singapore’s Securities and Futures Act contains rules designed to prevent improper market manipulation and misleading trading practices.
This subsidiary legislation does not repeal those rules. Instead, it carves out an exemption—subject to strict conditions—so that stabilising action can occur for the specified notes, by specified participants, and only within a defined time window after issuance.
What Are the Key Provisions?
1. Citation and commencement (Regulation 1)
The Regulations may be cited as the “Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Notes) (No. 15) Regulations 2004” and come into operation on 26 April 2004. This matters for compliance timing: the exemption is available only for stabilising action carried out after the Regulations take effect, and in any event it is also constrained by the 30-day post-issuance limit in Regulation 3(2).
2. Definitions (Regulation 2)
The Regulations define three central concepts: the “2009 Notes”, the “2011 Notes”, and “stabilising action”. The definitions are highly specific and tied to Tata Motors Limited and the relevant convertible note terms.
(a) “2009 Notes” are described as 5-year convertible notes due April 2009 issued by Tata Motors Limited for a principal amount of up to US$150 million. They are convertible into either (i) fully paid Tata Motors equity shares (par value of 10 Indian Rupees each) or (ii) global depositary shares, where each share represents one fully paid equity share.
(b) “2011 Notes” are described as 7-year convertible notes due April 2011 issued by Tata Motors Limited for a principal amount of up to US$350 million, convertible into the same types of equity or global depositary shares.
(c) “stabilising action” is defined as an action taken in Singapore or elsewhere by Morgan Stanley & Co. International Ltd (or any of its related corporations) to buy, or to offer or agree to buy, any of the 2009 Notes or 2011 Notes in order to stabilise or maintain the market price of the relevant notes in Singapore or elsewhere. This definition is crucial: it limits the exemption to stabilisation activities conducted by Morgan Stanley entities (and their related corporations) and to the specified notes.
3. The exemption from sections 197 and 198 (Regulation 3)
The operative provision is Regulation 3. It provides that, subject to paragraph (2), sections 197 and 198 of the Securities and Futures Act shall not apply to stabilising action carried out in respect of the 2009 Notes or 2011 Notes with respect to 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.
In practical terms, the exemption is not blanket. It is conditional on the identity of the counterparty (or the relevant category of persons) involved in the stabilising action. Sections 274 and 275(2) of the Act typically operate as gateways for certain categories of investors or counterparties. For a practitioner, the key compliance task is to confirm that each stabilising trade or arrangement is with a counterparty that fits one of these categories.
4. The time limit: 30 calendar days after issuance (Regulation 3(2))
Even where the counterparty condition is satisfied, the exemption does not apply to stabilising action carried out at any time after the expiry of 30 calendar days from the date of issuance of the relevant notes. This is a hard stop. It means that stabilisation must be conducted within a narrow post-issuance period, reflecting the regulatory view that stabilisation is most relevant immediately after distribution when market imbalance may occur.
For legal and compliance teams, this time limitation has operational consequences: policies must track the issuance date, monitor trading activity, and ensure that any stabilising bids or purchases (or offers/agreements to buy) are completed within the permitted window.
5. Formal making and signatory
The Regulations were made on 22 April 2004 by Koh Yong Guan, Managing Director of MAS. The formal making date is relevant for the legislative record, while commencement is separately stated as 26 April 2004.
How Is This Legislation Structured?
The Regulations are concise and consist of:
- Regulation 1: Citation and commencement (when the instrument takes effect).
- Regulation 2: Definitions (defining the specific notes and what counts as “stabilising action”).
- Regulation 3: Exemption (the core operative rule, including counterparty conditions and the 30-day limitation).
There are no additional parts or schedules in the extract provided. The structure reflects the instrument’s purpose: to grant a narrow exemption for a defined stabilisation scenario rather than to establish a comprehensive regulatory regime.
Who Does This Legislation Apply To?
Although the exemption is framed as an exemption from the Securities and Futures Act’s sections 197 and 198, it is effectively directed at the parties conducting stabilising action and the circumstances in which such action occurs. The definition of “stabilising action” restricts the activity to actions taken by Morgan Stanley & Co. International Ltd or its related corporations. Therefore, the exemption is not generally available to other dealers or arrangers unless they fall within the defined Morgan Stanley group.
Additionally, Regulation 3(1) limits the exemption to stabilising action carried out with either (i) persons referred to in section 274 of the Act or (ii) sophisticated investors as defined in section 275(2). Accordingly, even where Morgan Stanley entities are involved, the exemption is only available for stabilising dealings with qualifying counterparties.
Finally, Regulation 3(2) limits the exemption temporally: stabilising action must occur within 30 calendar days from the issuance date of the relevant notes. This means the exemption is not available for longer-term price support strategies.
Why Is This Legislation Important?
This Regulations is important because it demonstrates how Singapore reconciles two regulatory objectives: (1) preventing market misconduct and manipulation, and (2) allowing legitimate market practices associated with securities issuance. Stabilisation can be commercially beneficial—helping to reduce volatility and support orderly trading—yet it can also create risks of misleading price signals. The exemption therefore operates as a controlled exception to the general market conduct framework.
For practitioners, the key significance lies in the precision of the exemption. It is tailored to specific instruments (Tata Motors convertible notes due 2009 and 2011), a specific stabiliser (Morgan Stanley and related corporations), specific counterparty categories (sections 274 and 275(2)), and a specific time horizon (30 calendar days). This precision reduces ambiguity and provides a compliance roadmap: if all conditions are met, sections 197 and 198 do not apply; if any condition fails, the general market conduct rules remain applicable.
From an enforcement and risk perspective, the time limit and counterparty limitations are likely to be the most common points of failure. A compliance review should therefore focus on: (i) confirming the notes fall within the defined “2009 Notes” or “2011 Notes”; (ii) verifying that the stabilising activity is undertaken by the defined Morgan Stanley entities; (iii) checking that each stabilising transaction or arrangement is with a qualifying person; and (iv) ensuring all stabilising activity occurs within the 30-day window.
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 (as referenced in the metadata timeline context).
- Stabilising Act (as referenced in the metadata timeline context).
- Timeline / Legislation history materials (as referenced 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. 15) Regulations 2004 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the official text for authoritative provisions.