Statute Details
- Title: Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Notes) (No. 2) Regulations 2006
- Act Code: SFA2001-S27-2006
- Type: Subsidiary Legislation (SL)
- Enacting Authority: Monetary Authority of Singapore (MAS)
- Authorising Act: Securities and Futures Act (SFA) (specifically section 337(1))
- Commencement / Operation: 18 January 2006
- Legislation Status: Current version as at 27 March 2026
- Key Provisions:
- Section 1: Citation and commencement
- Section 2: Definitions (including “Notes” and “stabilising action”)
- Section 3: Exemption from sections 197 and 198 of the SFA for specified stabilising action in respect of specified Notes
- Regulatory Focus: Market conduct rules relating to stabilising transactions in connection with a particular issuance of notes
What Is This Legislation About?
The Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Notes) (No. 2) Regulations 2006 (“Stabilising Action (Notes) Regulations”) is a targeted regulatory instrument. It grants a specific exemption from certain market conduct provisions in the Securities and Futures Act (SFA) for stabilising activities carried out in relation to a defined set of debt securities (“Notes”).
In plain language, the Regulations recognise that, in certain bond or note issuances, market participants may undertake “stabilising action” to support or maintain the market price of the securities shortly after issuance. Such stabilisation can be commercially important to ensure orderly trading and reduce volatility during the initial period after a new issue.
However, stabilisation can also raise investor-protection concerns, because it may affect price discovery. The SFA therefore contains rules (in sections 197 and 198) that restrict or regulate stabilising conduct. This subsidiary legislation carves out a narrow exemption—only for stabilising action in respect of the specified Notes, only within a defined time window, and only when the stabilising counterparties fall within specified categories.
What Are the Key Provisions?
Section 1 (Citation and commencement) is straightforward. It provides the formal name of the Regulations and states that they come into operation on 18 January 2006. For practitioners, this matters when assessing whether stabilising activity occurred within the legal framework applicable at the relevant time.
Section 2 (Definitions) is where the scope is tightly controlled. The Regulations define:
- “Notes”: the Regulations apply only to the 7-year fixed rate guaranteed notes due January 2013 issued by Excelcomindo Finance Company B.V. for a principal amount of up to US$400 million, which are unconditionally and irrevocably guaranteed by P.T. Excelcomindo Pratama Tbk.
- “securities”: this has the same meaning as in section 239(1) of the SFA, ensuring the general statutory definitions are incorporated.
- “stabilising action”: an action taken in Singapore or elsewhere by UBS AG (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.
Two practical implications follow. First, the exemption is not generic: it is tied to a particular issuance and a particular stabilising participant (UBS AG and related corporations). Second, “stabilising action” is defined functionally (to stabilise or maintain market price), and includes not only actual purchases but also offers or agreements to buy—meaning that contractual arrangements and conditional commitments may fall within the definition.
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, provided the stabilising action is taken with one of the following categories of counterparty:
- (a) an institutional investor
- (b) a relevant person as defined in section 275(2) of the SFA
- (c) a person who acquires the Notes as principal, but only if the consideration for the acquisition is not less than $200,000 (or its equivalent in a foreign currency) for each transaction, whether paid in cash or by exchange of securities or other assets.
For practitioners, the exemption is best understood as a three-part filter:
- Time filter: stabilising action must occur within 30 days from the date of issue of the Notes.
- Security filter: the stabilising action must be in respect of the defined “Notes” (the Excelcomindo issuance).
- Counterparty filter: the stabilising action must be taken with an institutional investor, a relevant person, or a principal acquirer meeting the minimum consideration threshold.
The minimum consideration threshold in paragraph (c) is particularly important. It is designed to ensure that the exemption does not extend to smaller retail-type transactions. The threshold applies “for each transaction” and covers both cash consideration and consideration by exchange of securities or other assets. This breadth is legally significant: it prevents circumvention by structuring consideration as non-cash exchanges.
How Is This Legislation Structured?
The Regulations are concise and consist of three sections:
- Section 1 sets out the citation and commencement.
- Section 2 provides definitions, including the precise identification of the “Notes” and the definition of “stabilising action” tied to UBS AG (and related corporations).
- Section 3 creates the exemption from specified SFA provisions (sections 197 and 198) for stabilising action meeting the time and counterparty conditions.
There are no additional parts, schedules, or procedural requirements in the extract provided. The legal effect is therefore concentrated in the exemption clause and the definitions that delimit its reach.
Who Does This Legislation Apply To?
Although the exemption is framed as an exemption from the application of SFA provisions, it effectively governs the conduct of parties who undertake stabilising action in relation to the specified Notes. The definition of “stabilising action” identifies the stabilising actor: UBS AG or its related corporations. Accordingly, the Regulations are most relevant to UBS AG and its group entities involved in market-making, underwriting support, or stabilisation activities for the Notes.
In addition, the exemption is conditioned on the counterparty with whom stabilising action is taken. It therefore also matters to the categories of persons listed in section 3—institutional investors, relevant persons (as defined in the SFA), and principal acquirers meeting the minimum consideration threshold. For deal teams, compliance officers, and counsel, the counterparty classification and transaction value are key factual determinations.
Why Is This Legislation Important?
This Regulations is important because it illustrates how Singapore’s market conduct framework balances investor protection with practical market functioning during security issuance. Stabilisation can support liquidity and reduce disorderly price movements in the immediate post-issuance period. Yet, without regulatory guardrails, stabilisation could undermine fair price discovery. By exempting stabilising action from specific SFA provisions, the Regulations permit stabilisation—but only within a tightly bounded context.
From a compliance perspective, the exemption’s narrow tailoring is the central lesson. A practitioner advising on stabilisation must confirm at least four elements: (1) the security is the defined “Notes”; (2) the stabilising activity is undertaken by UBS AG or its related corporations; (3) the activity occurs within 30 days from the date of issue; and (4) the counterparties fall within the specified categories, including the $200,000 minimum consideration requirement for principal acquisitions.
From an enforcement and risk-management standpoint, the exemption’s conditional nature means that any deviation—such as stabilising outside the 30-day window, dealing with counterparties that do not qualify, or stabilising in respect of different securities—could result in the SFA market conduct provisions applying. Counsel should therefore ensure that deal documentation, trade reporting, and internal compliance controls are aligned with the exemption’s conditions.
Related Legislation
- Securities and Futures Act (Cap. 289) — particularly sections 197, 198, 239(1), 275(2), and the regulation-making power in section 337(1).
- Futures Act (as referenced in the legislation metadata/timeline context).
- Stabilising Act (as referenced in the legislation metadata/timeline 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. 2) Regulations 2006 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the official text for authoritative provisions.