Statute Details
- Title: Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Notes) (No. 24) Regulations 2005
- Act Code: SFA2001-S441-2005
- Legislation Type: Subsidiary legislation (SL)
- Authorising Act: Securities and Futures Act (Cap. 289)
- Enacting Power: Section 337(1) of the Securities and Futures Act
- Commencement: 6 July 2005
- Key Provisions: Section 2 (definitions); Section 3 (exemption)
- Regulatory Status: Current version as at 27 Mar 2026 (per the provided extract)
- Instrument Reference: SL 441/2005
What Is This Legislation About?
The Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Notes) (No. 24) Regulations 2005 (“Stabilising Action Exemption Regulations”) is a targeted regulatory instrument. In plain language, it creates a specific exemption from certain market conduct rules in the Securities and Futures Act (“SFA”) for a particular kind of trading activity—namely, stabilising purchases or offers—relating to a defined set of debt securities.
Stabilisation is a practice commonly used in securities offerings. After issuance, a stabilising participant may buy (or offer to buy) the relevant securities to help maintain or support their market price. Without an exemption, such activity could potentially fall within prohibitions or restrictions designed to prevent market manipulation or improper dealing. These Regulations therefore carve out a narrow permission, but only for stabilising action that meets the defined conditions.
Importantly, the Regulations are not general-purpose. They are drafted around a specific issuance: 7-year fixed rate notes due July 2012 issued by IndoCoal Exports (Cayman) Limited, up to a specified principal amount. The exemption is also limited to stabilising action taken by a named stabilising entity (Merrill Lynch, Pierce, Fenner & Smith Incorporated) or its related corporations, and only within a defined time window after issuance.
What Are the Key Provisions?
Section 1 (Citation and commencement) provides the formal identity of the Regulations and states that they come into operation on 6 July 2005. For practitioners, this matters because stabilising activity must be assessed against the regulatory regime in force at the time the action is taken. Here, the Regulations were made and commenced in July 2005.
Section 2 (Definitions) is central because it tightly constrains the scope of the exemption. Two definitions do the work:
- “Notes” are defined as the 7-year fixed rate notes due July 2012 issued by IndoCoal Exports (Cayman) Limited, for a principal amount of up to US$600 million.
- “stabilising action” is defined as an action taken in Singapore or elsewhere by Merrill Lynch, Pierce, Fenner & Smith Incorporated (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.
From a legal risk perspective, these definitions are not merely descriptive; they are the gatekeeping conditions. If the stabilising activity does not fall within the defined “Notes” (wrong issuer, wrong maturity, wrong instrument type, or wrong issuance size) or is not taken by the defined stabilising entity (or its related corporations), the exemption will not apply.
Section 3 (Exemption) is the operative provision. It states that Sections 197 and 198 of the Act shall not apply to any stabilising action taken in respect of any of the Notes, within 30 days from the date of issue, with respect to stabilising action taken by either:
- a person referred to in section 274 of the Act; or
- a sophisticated investor as defined in section 275(2) of the Act.
In practical terms, Section 3 creates a time-limited and participant-limited carve-out. The exemption is not open-ended: stabilising action must occur within 30 days from the date of issue of the Notes. It is also not universally available to any market participant. The stabilising action must be taken in circumstances involving either a category of person under section 274 or a sophisticated investor under section 275(2).
Although the extract does not reproduce Sections 197 and 198 of the SFA, the structure indicates that those sections contain market conduct restrictions that would otherwise capture stabilising dealing. The Regulations therefore function as a regulatory “permission” that prevents stabilisation from being treated as a breach of those prohibitions, provided the statutory conditions are met.
How Is This Legislation Structured?
The Regulations are short and structured as a typical subsidiary legislative instrument with three provisions:
- Section 1: Citation and commencement.
- Section 2: Definitions of “Notes” and “stabilising action”.
- Section 3: The exemption from Sections 197 and 198 of the SFA, including the time limit (30 days from issue) and the eligible persons/investor categories (section 274 persons or sophisticated investors under section 275(2)).
For practitioners, the brevity is itself a feature: the legal effect is concentrated in Section 3, but Section 2 must be read carefully because it defines the universe of eligible instruments and eligible stabilising actors.
Who Does This Legislation Apply To?
The Regulations apply to stabilising action relating to the defined Notes and taken by the defined stabilising participant(s). While the exemption is framed as an exclusion from the application of Sections 197 and 198 of the SFA, the practical beneficiaries are market participants who engage in stabilisation in connection with the specified issuance.
In addition, Section 3 conditions the exemption on the stabilising action being taken with respect to either (a) a person referred to in section 274 of the SFA or (b) a sophisticated investor as defined in section 275(2). Accordingly, the exemption is not simply about who performs the stabilising trades; it also depends on the relevant counterparty or dealing context falling within those statutory categories. Lawyers advising issuers, lead managers, or stabilising agents should therefore map the transaction parties and investor classification to the SFA definitions.
Why Is This Legislation Important?
This Regulations is important because it addresses a classic tension in securities regulation: stabilisation can support orderly markets and reduce volatility immediately after issuance, but it can also resemble conduct that market abuse rules seek to prevent. By carving out a narrow exemption, the Regulations allow stabilisation to occur without triggering the prohibitions in Sections 197 and 198—so long as the action is tightly bounded by instrument, actor, and timing.
For practitioners, the key value lies in compliance certainty. Stabilising activity is often undertaken under offering documentation and market practice, but the legal permissibility depends on whether the action falls within the exemption. The defined scope in Section 2 (specific Notes and specific stabilising entity) and the constraints in Section 3 (30-day window; eligible persons/investors) mean that a compliance review should be evidence-driven: confirm the exact instrument, confirm the stabilising participant identity, confirm the dates, and confirm the investor/person category.
Enforcement risk is also shaped by the exemption’s limited nature. If stabilising action extends beyond 30 days from the date of issue, or if it involves instruments outside the defined “Notes,” or if it is undertaken by an entity not covered by the “stabilising action” definition, the exemption will likely fail. In that event, the underlying prohibitions in Sections 197 and 198 could apply, exposing the stabilising participant and potentially other transaction parties to regulatory scrutiny.
Related Legislation
- Securities and Futures Act (Cap. 289) — in particular:
- Sections 197 and 198 (market conduct provisions from which the exemption is carved out)
- Section 274 (persons referenced in the exemption)
- Section 275(2) (definition of “sophisticated investor”)
- Section 337(1) (authorising provision for making the Regulations)
- Futures Act (referenced in the provided metadata as related legislation)
- Stabilising Act (referenced in the provided metadata as related legislation)
- Timeline (legislation timeline reference 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. 24) Regulations 2005 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the official text for authoritative provisions.