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 (SFA), specifically section 337(1)
- Enacting authority: Monetary Authority of Singapore (MAS)
- Commencement: 26 April 2004
- Legislative status: Current version as at 27 March 2026 (per the provided extract)
- Legislative instrument number: SL 225/2004
- 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 within Singapore’s market conduct framework. In essence, it allows certain “stabilising actions” to be taken in relation to specific convertible notes—without triggering particular statutory prohibitions that would otherwise apply.
Market conduct rules in the Securities and Futures Act (SFA) are designed to protect investors and maintain fair and orderly markets. They generally restrict conduct that could mislead the market or distort prices. However, stabilisation is a recognised market practice in some offerings: under controlled conditions, an arranger or dealer may buy (or offer to buy) securities to help stabilise or maintain their market price after issuance.
This set of Regulations is narrow and instrument-specific. It does not create a general stabilisation regime for all securities. Instead, it exempts stabilising action in respect of two particular tranches of Tata Motors Limited convertible notes due in 2009 and 2011 (“2009 Notes” and “2011 Notes”), and it limits the exemption by (i) who may be involved and (ii) the time window during which stabilisation may occur.
What Are the Key Provisions?
1. Definitions (Section 2)
The Regulations define the scope of the exemption through three key concepts: the “2009 Notes”, the “2011 Notes”, and “stabilising action”.
The “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 (a) fully paid equity shares of Tata Motors Limited (par value of 10 Indian Rupees each) or (b) global depositary shares, where each share represents one fully paid equity share.
The “2011 Notes” are similarly defined 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 categories of underlying equity or global depositary shares.
The definition of “stabilising action” is also crucial. It refers to 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, the 2009 Notes or 2011 Notes in order to stabilise or maintain the market price of those notes in Singapore or elsewhere. This definition ties the exemption to a particular stabilising participant and a particular purpose (price stabilisation/maintenance).
2. The exemption from sections 197 and 198 of the SFA (Section 3(1))
Section 3(1) provides the operative legal effect: 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.
While the extract does not reproduce the text of sections 197 and 198, the structure indicates that those provisions contain prohibitions relevant to market conduct—likely including restrictions on certain trading or conduct that could affect price formation. The Regulations therefore carve out an exception: stabilising action meeting the conditions will not be treated as contravening those SFA provisions.
The exemption is conditional on the stabilising action being carried out with a person in one of two categories:
- (a) A person referred to in section 274 of the SFA
- (b) A “sophisticated investor” as defined in section 275(2) of the SFA
Practically, this means that stabilisation is not intended to be conducted broadly with any market participant. Instead, it is limited to dealings with specified counterparties—either those falling within the section 274 category or those who qualify as sophisticated investors under the SFA framework. For practitioners, this is a key compliance checkpoint: the exemption’s availability depends not only on the stabilising action itself, but also on the identity/qualification of the counterparty.
3. Time limitation: 30 calendar days from issuance (Section 3(2))
Even if the stabilising action is undertaken by the defined stabiliser and with an eligible counterparty, the exemption is further limited by time. Section 3(2) states that the exemption in paragraph (1) 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 classic stabilisation constraint: it ensures that any price-support activity is confined to the early post-issuance period when market price discovery may be most volatile. For legal and compliance teams, the “30 calendar days” rule requires careful operational controls—particularly around the exact “date of issuance” and the recording of trade dates and settlement timelines (even though the Regulation speaks in terms of “carried out at any time after” expiry, which typically focuses on the time of the stabilising action rather than settlement).
4. Administrative details
The Regulations include a standard enacting formula and signature block. MAS made the Regulations on 22 April 2004, and the instrument comes into operation on 26 April 2004. These details matter for determining the effective regulatory position at the time of the relevant offering and stabilisation activities.
How Is This Legislation Structured?
The Regulations are short and structured around a simple three-section framework:
- Section 1 (Citation and commencement): provides the short title and the commencement date (26 April 2004).
- Section 2 (Definitions): defines the specific notes (2009 Notes and 2011 Notes) and the term “stabilising action”, including the stabiliser (Morgan Stanley & Co. International Ltd and related corporations) and the purpose (stabilise/maintain market price).
- Section 3 (Exemption): sets out the exemption from SFA sections 197 and 198, including the counterparty conditions and the 30-day time limit.
Because the instrument is so targeted, there are no additional parts, schedules, or complex procedural requirements in the extract. The legal work therefore focuses on mapping the facts of a stabilisation programme to the defined terms and conditions in Section 3.
Who Does This Legislation Apply To?
In practical terms, the Regulations apply to parties involved in stabilising action in relation to the specified Tata Motors convertible notes. The exemption is designed for stabilising activity undertaken by Morgan Stanley & Co. International Ltd or its related corporations, because “stabilising action” is defined by reference to that entity and its related corporations.
However, the exemption also depends on the nature of the counterparty. Section 3(1) limits the exemption to stabilising action carried out with a person falling within section 274 of the SFA or with a sophisticated investor under section 275(2). Therefore, even if the stabiliser is the defined entity, the exemption may not apply if the stabilising trades are conducted with counterparties outside those categories.
Accordingly, the Regulations are most relevant to: (i) the stabilising dealer/arranger and its compliance teams; (ii) legal counsel advising on offering documentation and stabilisation mechanics; and (iii) counterparties (including sophisticated investors) who may be counterparties to stabilisation transactions.
Why Is This Legislation Important?
This instrument is important because it operationalises a balance between two regulatory objectives: maintaining market integrity while permitting controlled stabilisation practices. Without the exemption, stabilising trades could potentially fall within the scope of prohibitions in the SFA (sections 197 and 198). By carving out stabilising action for the defined notes, the Regulations provide legal certainty for the stabilisation programme.
For practitioners, the key significance lies in the precision of the exemption. It is not a blanket authorisation for any stabilisation activity. Instead, it is constrained by:
- Instrument specificity: only the 2009 Notes and 2011 Notes as defined.
- Participant specificity: stabilising action by Morgan Stanley & Co. International Ltd or related corporations.
- Counterparty specificity: dealings must be with persons in section 274 or sophisticated investors under section 275(2).
- Temporal specificity: stabilisation is limited to within 30 calendar days from issuance.
From an enforcement and compliance perspective, these constraints create clear audit points. A regulator or court would likely examine whether stabilisation activities were conducted within the permitted period, whether the correct entity undertook the stabilisation, and whether the counterparties met the statutory categories. Documentation—such as trade logs, counterparty classification evidence, and issuance date records—becomes central to demonstrating eligibility for the exemption.
Finally, because the Regulations are “current version” as at 27 March 2026 (per the extract), practitioners should still treat them as part of the operative legal landscape for any analysis of historical or ongoing stabilisation programmes tied to these notes. Even though the notes themselves are due in 2009 and 2011, the legal principles and drafting approach remain instructive for advising on stabilisation exemptions in other offerings.
Related Legislation
- Securities and Futures Act (SFA) (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 provided metadata)
- Stabilising Act (as referenced in the provided metadata)
- Timeline (as referenced in the 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. 15) Regulations 2004 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the official text for authoritative provisions.