Statute Details
- Title: Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Notes) (No. 20) Regulations 2005
- Act Code: SFA2001-S407-2005
- Legislation Type: Subsidiary Legislation (SL)
- Authorising Act: Securities and Futures Act (Cap. 289) — powers under section 337(1)
- SL Number: SL 407/2005
- Citation: Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Notes) (No. 20) Regulations 2005
- Commencement: 23 June 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. 20) Regulations 2005 (“Stabilising Action Exemption Regulations”) is a targeted regulatory instrument made under the Securities and Futures Act (SFA). In plain terms, it creates a narrow exemption from certain market conduct rules that would otherwise restrict stabilising purchases in connection with a specific issuance of notes.
Market conduct provisions in the SFA are designed to protect investors and maintain fair and orderly markets. They generally prohibit or regulate certain trading behaviours that could distort prices or mislead the market. However, in some capital markets transactions—particularly bond and note issuances—stabilisation is a recognised practice. Under stabilisation arrangements, a stabilising manager may buy (or offer to buy) securities shortly after issuance to help maintain orderly trading and reduce excessive price volatility.
This legislation does not broadly authorise stabilisation. Instead, it grants an exemption only for stabilising action relating to a defined set of “Notes” and only for stabilising action taken by a specified stabilising party (J.P. Morgan Securities Ltd., and related corporations). It also limits the exemption to a strict time window and to stabilising counterparties that meet defined investor categories.
What Are the Key Provisions?
Section 1 (Citation and commencement) sets out the legal name of the Regulations and provides that they come into operation on 23 June 2005. For practitioners, this matters when assessing whether stabilising conduct occurred within the regulatory framework applicable at the relevant time.
Section 2 (Definitions) is crucial because the exemption is tightly bounded by the definitions of “Notes” and “stabilising action”. The Regulations define “Notes” as the 7-year fixed rate guaranteed notes due June 2012 issued by Indosat International Finance Company B.V. for up to US$250 million, and irrevocably and unconditionally guaranteed by PT Indosat Tbk. This means the exemption is transaction-specific: stabilising action in respect of other notes (even if issued by the same issuer or guarantor) would not automatically fall within the exemption.
The Regulations also define “stabilising action” as an action taken in Singapore or elsewhere by J.P. Morgan Securities Ltd. (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. This definition is significant for two reasons. First, it identifies the stabilising party: the exemption is not available to other dealers or arrangers unless they fall within the “related corporations” concept. Second, it captures not only actual purchases but also offers or agreements to buy—meaning that contractual commitments and conditional arrangements may need to be structured with the exemption in mind.
Section 3 (Exemption) is the operative provision. It provides 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 with a counterparty that falls within one of two categories:
- (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.
From a practitioner’s perspective, the exemption has three main conditions: (1) the stabilising action must relate to the defined Notes; (2) it must be taken within the 30-day post-issue period; and (3) it must be conducted with eligible counterparties (section 274 persons or sophisticated investors). If any of these conditions is not met, the exemption would not apply, and the general prohibitions or restrictions in sections 197 and 198 would likely govern the conduct.
Although the extract does not reproduce the text of sections 197 and 198, the structure indicates that those provisions are the market conduct rules that would otherwise constrain stabilising purchases. The Regulations therefore operate as a carve-out: they do not change the underlying market conduct framework, but they temporarily and selectively remove the application of specified sections for stabilisation in the defined circumstances.
How Is This Legislation Structured?
The Regulations are short and consist of an enacting formula and three substantive provisions:
- Section 1 — Citation and commencement (when the Regulations take effect).
- Section 2 — Definitions (defining “Notes” and “stabilising action”).
- Section 3 — Exemption (the legal carve-out from sections 197 and 198 of the SFA, subject to time and counterparty conditions).
There are no additional parts or complex schedules in the extract provided. The legislative design is therefore “precision drafting”: it uses definitions to lock the exemption to a particular transaction and stabilising arrangement, and then uses a single operative section to grant the exemption.
Who Does This Legislation Apply To?
In practical terms, the Regulations apply to parties involved in stabilising transactions in relation to the defined Indosat notes. The exemption is framed around stabilising action taken by J.P. Morgan Securities Ltd. or its related corporations. Accordingly, the primary compliance audience is the stabilising manager and its trading desks, as well as any related corporations that may execute stabilising trades.
However, the exemption also depends on the identity of the counterparty. Stabilising action must be taken with either (i) a person referred to in section 274 of the SFA or (ii) a sophisticated investor under section 275(2). This means that even where the stabilising manager is eligible, the exemption will not cover stabilising trades executed with counterparties outside those categories. Lawyers advising on execution strategy, allocation, and trade documentation must therefore consider both the stabiliser and the counterparty eligibility.
Why Is This Legislation Important?
This Regulations is important because it enables a commonly used market practice—stabilisation—while preserving investor protection and market integrity. Without an exemption, stabilising purchases could fall within the prohibitions or restrictions in the SFA’s market conduct provisions. The exemption provides legal certainty for stabilising managers and helps ensure that stabilisation can occur in a controlled and time-limited manner.
For practitioners, the key value lies in the specificity of the exemption. The Regulations do not create a general stabilisation regime; they create a transaction-specific carve-out. This means that legal advice must be fact-intensive. Counsel should verify: (1) the exact instrument being stabilised (matching the defined “Notes”); (2) the stabilising party (J.P. Morgan Securities Ltd. or related corporations); (3) the timing (within 30 days from issue); and (4) the counterparties (section 274 persons or sophisticated investors). Missing any element could expose the stabilising activity to regulatory breach.
From an enforcement and compliance standpoint, the exemption also highlights how regulators expect stabilisation to be bounded. The 30-day window reflects a policy judgment that stabilisation should be limited to the immediate post-issuance period when price discovery and liquidity formation are most sensitive. The counterparty restrictions reflect a risk-based approach: sophisticated investors and certain other regulated categories are treated as better able to assess risks and understand market conduct dynamics.
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 statute metadata timeline context).
- Stabilising Act (as referenced in the statute metadata timeline context).
- Timeline (legislation versioning reference in the platform’s 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. 20) Regulations 2005 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the official text for authoritative provisions.