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) (“SFA”)
- Enacting Authority: Monetary Authority of Singapore (“MAS”)
- Enacting Power: Section 337(1) of the SFA
- Citation and Commencement: Comes into operation on 6 July 2005
- Key Provisions: Section 2 (definitions); Section 3 (exemption)
- Instrument Number: SL 441/2005
- Status (as provided): Current version as at 27 Mar 2026
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 is a targeted regulatory instrument. In plain language, it creates a narrow exemption from certain “market conduct” rules in the Securities and Futures Act for a specific type of stabilising activity relating to a particular bond issue.
Stabilising action is a practice commonly used in securities offerings: market participants may buy (or offer to buy) securities shortly after issuance to help maintain orderly trading and reduce volatility. However, stabilisation can overlap with statutory prohibitions on market manipulation or improper dealing. This Regulations package therefore carves out a permitted pathway for stabilisation, but only for a defined set of circumstances.
Importantly, the Regulations are not general-purpose. They are drafted around a specific bond (“Notes”) and a specific stabilising participant (Merrill Lynch, Pierce, Fenner & Smith Incorporated and related corporations). The exemption is time-limited and applies only to stabilising actions taken within a defined window after issuance.
What Are the Key Provisions?
Section 1 (Citation and commencement) provides the short title and the commencement date. The Regulations may be cited as the “Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Notes) (No. 24) Regulations 2005” and they come into operation on 6 July 2005. For practitioners, this matters for determining whether any stabilising conduct occurred after the Regulations took effect (though the exemption itself is anchored to the “within 30 days from the date of issue” requirement).
Section 2 (Definitions) is the core interpretive section. It defines two terms that control the scope of the exemption:
- “Notes” are defined very specifically 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.
These definitions are legally significant because they narrow the exemption to (i) a particular instrument and (ii) a particular stabilisation actor and purpose. A stabilising strategy by a different dealer, or aimed at a different objective (for example, supporting a different market segment), would not automatically fall within the exemption.
Section 3 (Exemption) is the operative provision. It states that Sections 197 and 198 of the SFA 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 actions taken by either:
- (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.
In practical terms, the Regulations remove the risk that stabilising dealing would trigger the prohibitions contained in the referenced SFA provisions. While the extract does not reproduce Sections 197 and 198 themselves, the structure indicates that those sections impose restrictions that would otherwise apply to dealing or market conduct. This exemption is therefore a compliance “safe harbour” for stabilisation, but only if the stabilising action is conducted within the specified time period and by (or involving) the specified categories of counterparties.
Time limitation: The exemption is limited to stabilising actions taken within 30 days from the date of issue. This is a bright-line requirement. For legal and compliance teams, it means that any stabilising trades outside the 30-day window would likely fall back into the general regime under the SFA (and could expose the participant to enforcement risk).
Counterparty limitation: The exemption is also limited to stabilising actions “with” a person referred to in section 274 or a sophisticated investor under section 275(2). This means the exemption is not purely about the stabiliser’s identity; it also depends on the category of the other party to the dealing. Practitioners should therefore map the transaction counterparties and ensure they satisfy the statutory categories.
Geographic scope: The definition of stabilising action includes actions taken “in Singapore or elsewhere” and aimed at stabilising or maintaining the market price “in Singapore or elsewhere.” This suggests that the exemption is not confined to Singapore trading venues, which is relevant where stabilisation may occur through cross-border dealing or offshore execution.
How Is This Legislation Structured?
Although the Regulations are short, their structure is typical of Singapore subsidiary legislation:
- Section 1 sets out the citation and commencement.
- Section 2 provides definitions that control the meaning of key terms (“Notes” and “stabilising action”).
- Section 3 contains the exemption from specified SFA provisions, including the time limit and the categories of persons/investors involved.
There are no additional parts or complex schedules in the extract provided. The Regulations operate as a focused carve-out rather than a comprehensive market conduct code.
Who Does This Legislation Apply To?
The Regulations apply to stabilising actions in respect of the defined Notes, when those actions are carried out by the defined stabilising actor (Merrill Lynch, Pierce, Fenner & Smith Incorporated or related corporations) and are aimed at stabilising or maintaining the market price of the Notes. The exemption is therefore primarily relevant to the underwriting/syndication and dealing teams involved in the issuance of these Notes.
However, the exemption also depends on the counterparty category. Section 3 requires that the stabilising action be taken “with” either a person referred to in section 274 of the SFA or a sophisticated investor as defined in section 275(2). Accordingly, the Regulations affect not only the stabiliser’s internal compliance posture, but also the legal characterization of the counterparties in the stabilisation trades.
Why Is This Legislation Important?
This Regulations instrument is important because it illustrates how Singapore law balances two competing policy objectives: (i) preventing market manipulation and improper market conduct, and (ii) allowing legitimate stabilisation practices that can support orderly trading in the immediate post-issuance period.
From a practitioner’s perspective, the value of the exemption lies in reducing uncertainty. Without an exemption, stabilising purchases or offers to buy could be argued to fall within prohibited conduct under the SFA. By expressly disapplying Sections 197 and 198, MAS provides a legal basis for stabilisation—provided the strict conditions are met.
The compliance implications are practical and immediate:
- Trade timing controls: systems must track the date of issue and ensure stabilisation activity occurs only within the 30-day window.
- Counterparty diligence: legal teams should confirm that counterparties meet the statutory categories (section 274 persons or sophisticated investors under section 275(2)).
- Purpose and conduct evidence: because “stabilising action” is defined by purpose (to stabilise or maintain market price), firms should document the rationale and ensure the trading strategy aligns with that purpose.
- Scope of instruments: the exemption is tied to a specific bond issue (IndoCoal Exports (Cayman) Limited, 7-year fixed rate notes due July 2012, up to US$600 million). Stabilisation of other instruments would not be covered.
Finally, the Regulations demonstrate the “bespoke” nature of some Singapore market conduct exemptions: rather than creating a broad stabilisation regime in one place, MAS may issue targeted exemptions for particular offerings and participants. Lawyers should therefore check whether an exemption exists for the specific transaction and whether any conditions mirror the firm’s intended conduct.
Related Legislation
- Securities and Futures Act (Cap. 289) — in particular:
- Sections 197 and 198 (disapplied by the exemption)
- Section 274 (persons referenced for the exemption’s counterparty condition)
- Section 275(2) (definition of “sophisticated investor”)
- Section 337(1) (MAS’s power to make these Regulations)
- Futures Act (referenced in the provided metadata context)
- Stabilising Act (referenced in the provided metadata context)
- 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.