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), specifically section 337(1)
- Regulation No. / Citation: SL 225/2004
- Commencement: 26 April 2004
- 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. 15) Regulations 2004 (“Stabilising Action Exemption Regulations”) creates a targeted regulatory exemption from certain market conduct restrictions under the Securities and Futures Act (the “SFA”). In plain language, it allows specified stabilising activity in relation to two particular issues of convertible notes—without triggering the prohibitions that would otherwise apply.
Stabilising action is a concept used in capital markets to describe limited buying (or offers to buy) by a market participant, typically around the time of issuance, with the aim of supporting or maintaining the market price of newly issued securities. While such activity can be legitimate and market-practice oriented, it may also resemble conduct that market conduct rules seek to deter—such as manipulative trading or improper influence on price. The Regulations therefore carve out a narrow exemption, but only if strict conditions are met.
Importantly, this is not a general “stabilisation” regime for all securities. It is a bespoke exemption tied to two named instruments: “2009 Notes” and “2011 Notes” issued by Tata Motors Limited, and to stabilising actions undertaken by Morgan Stanley & Co. International Ltd (or its related corporations). The exemption is also time-limited, and it is subject to restrictions on the counterparties involved.
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. For practitioners, this matters because the exemption only becomes available from the commencement date, and any stabilising activity outside the effective period would not benefit from the statutory carve-out.
2. Definitions (Regulation 2)
The Regulations define three key terms that effectively determine the scope of the exemption:
- “2009 Notes”: Tata Motors Limited 5-year convertible notes due April 2009, up to US$150 million, convertible into either fully paid equity shares (par value of 10 Indian Rupees each) or global depositary shares (each representing one equity share).
- “2011 Notes”: Tata Motors Limited 7-year convertible notes due April 2011, up to US$350 million, convertible into either fully paid equity shares or global depositary shares on the same basis.
- “stabilising action”: an action taken in Singapore or elsewhere by Morgan Stanley & Co. International Ltd (or 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.
From a compliance perspective, these definitions are crucial. The exemption is limited to the specified notes and to stabilising action by the specified entity (Morgan Stanley & Co. International Ltd and related corporations). If a different dealer conducts stabilisation, or if the notes are not the defined 2009/2011 Notes, the exemption would not apply.
3. The exemption from sections 197 and 198 of the SFA (Regulation 3)
The core operative provision is Regulation 3. It states that sections 197 and 198 of the SFA shall not apply to stabilising action carried out in respect of the 2009 Notes or 2011 Notes, subject to conditions.
Condition A: Permitted counterparties (Regulation 3(1))
The exemption applies only to stabilising action carried out with either:
- a person referred to in section 274 of the SFA; or
- a sophisticated investor as defined in section 275(2) of the SFA.
Practically, this means the stabilising trades must be executed with the types of counterparties contemplated by the SFA’s investor classification framework. For market participants, this typically requires careful trade documentation and counterparty verification. If stabilising purchases are made with retail or other non-qualifying counterparties, the exemption could fail, exposing the conduct to the prohibitions in sections 197 and 198.
Condition B: Time limit (Regulation 3(2))
Even if the counterparty condition is met, the exemption does not apply to stabilising action carried out after the expiry of 30 calendar days from the date of issuance of the relevant notes (30 days from issuance of the 2009 Notes, or 30 days from issuance of the 2011 Notes).
This is a strict temporal boundary. In practice, stabilisation activity must be planned, monitored, and recorded so that no stabilising purchases (or offers/agreements to buy) occur beyond the 30-day window. For legal and compliance teams, this often requires controls around trade booking dates, settlement timing, and internal approvals to ensure the activity is within the statutory period.
4. Scope of stabilising action (Regulation 3 read with Regulation 2)
The definition of stabilising action includes actions taken “in Singapore or elsewhere” and to stabilise or maintain market price “in Singapore or elsewhere.” This indicates that the exemption is not confined to Singapore trading venues. However, the exemption is still tied to the specified notes and the specified stabiliser (Morgan Stanley & Co. International Ltd and related corporations). Therefore, cross-border stabilisation may be covered, but only if the activity fits the defined stabilising action and the conditions are satisfied.
How Is This Legislation Structured?
The Regulations are short and structured as follows:
- Regulation 1 (Citation and commencement): Provides the name of the Regulations and the commencement date (26 April 2004).
- Regulation 2 (Definitions): Defines “2009 Notes,” “2011 Notes,” and “stabilising action.” These definitions are the gatekeepers for the exemption.
- Regulation 3 (Exemption): Sets out the exemption from sections 197 and 198 of the SFA, subject to (i) permitted counterparties and (ii) a 30-calendar-day limit from issuance.
There are no additional Parts or complex sub-structures in the text provided. The Regulations function as a targeted carve-out rather than a comprehensive market conduct code.
Who Does This Legislation Apply To?
Although the Regulations are made under the SFA and refer to market conduct provisions, the exemption is operationally relevant to market participants who undertake stabilising activity in relation to the defined notes. The definition of “stabilising action” specifies that the action must be taken by Morgan Stanley & Co. International Ltd (or its related corporations). Accordingly, the exemption is primarily intended for that stabilising entity and its group companies.
However, the exemption also depends on the counterparties with whom stabilising trades are carried out. The Regulations therefore indirectly apply to the trading arrangements and counterparties used in the stabilisation programme. If trades are executed with persons outside the categories referenced in section 274 of the SFA or outside the “sophisticated investor” definition in section 275(2), the exemption would not apply, even if the stabiliser is the correct entity and the trades occur within the 30-day period.
Why Is This Legislation Important?
For practitioners, the significance of these Regulations lies in how they reconcile two competing regulatory objectives: (1) preventing market manipulation and improper market conduct, and (2) allowing legitimate stabilisation practices that can support orderly price formation around issuance.
By exempting stabilising action from sections 197 and 198 of the SFA, the Regulations provide legal certainty for a specific stabilisation programme. Without such an exemption, stabilising purchases could be argued to fall within prohibited conduct, creating substantial compliance risk for the issuer’s advisers, the stabilising manager, and counterparties involved in the trades.
From an enforcement and compliance standpoint, the Regulations also show the regulator’s approach: exemptions are narrow, instrument-specific, and conditional. The two most important compliance levers are (i) counterparty eligibility (section 274 persons or sophisticated investors) and (ii) time limitation (no stabilising action after 30 calendar days from issuance). These conditions should be embedded into trading controls, legal documentation, and post-trade monitoring.
Finally, because the definitions are bespoke—naming the notes and the stabiliser—this Regulations set is best understood as a “deal-specific” legal instrument. Lawyers advising on similar transactions should not assume that the exemption automatically extends to other issuances, other note terms, or other stabilising firms. Instead, they should check whether a comparable exemption exists or whether stabilisation must be structured under a different regulatory pathway.
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 platform metadata)
- Stabilising Act (as referenced in the platform metadata)
- Timeline (legislation timeline reference for version control)
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.