Statute Details
- Title: Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Notes) (No. 3) Regulations 2006
- Act Code: SFA2001-S28-2006
- Type: Subsidiary Legislation (SL)
- Authorising Act: Securities and Futures Act (SFA), specifically section 337(1)
- Commencement: 18 January 2006
- Enacting Authority: Monetary Authority of Singapore (MAS)
- Key Provisions: Section 2 (definitions); Section 3 (exemption)
- Regulatory Focus: Exemption from market conduct prohibitions for “stabilising action” relating to specified notes
- Instrument Type Covered: “Notes” (as defined—JGSH Philippines, Limited notes guaranteed by JG Summit Holdings, Inc.)
What Is This Legislation About?
The Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Notes) (No. 3) Regulations 2006 is a targeted regulatory instrument. In essence, it creates a narrow exemption from certain market conduct rules in the Securities and Futures Act (the “Act”) for stabilising activities carried out in relation to a specific bond/notes issuance.
In plain language, the Regulations recognise that, in some securities offerings, market participants may undertake “stabilising action” to help maintain orderly trading and reduce excessive price volatility shortly after issuance. However, stabilisation can overlap with conduct that would otherwise be prohibited under the Act (for example, conduct that could be characterised as creating a misleading appearance of market activity or price). This is why the Regulations provide an exemption—so stabilisation can occur, but only if strict conditions are met.
Importantly, this is not a general stabilisation regime for all securities. It is an exemption tailored to a particular set of “Notes” and a particular stabilisation actor (Credit Suisse First Boston (Europe) Limited and its related corporations), within a defined time window after issuance, and for specified categories of counterparties/investors.
What Are the Key Provisions?
Section 1 (Citation and commencement) sets the legal identity and timing. The Regulations may be cited as the “Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Notes) (No. 3) Regulations 2006” and came into operation on 18 January 2006. For practitioners, commencement matters because the exemption only becomes available from the date the Regulations are effective.
Section 2 (Definitions) is central because the exemption is only as broad as the defined terms. Three key definitions are provided:
- “Notes”: These are specifically defined as the 7-year fixed rate guaranteed notes due January 2013 issued by JGSH Philippines, Limited for up to US$300 million, unconditionally and irrevocably guaranteed by JG Summit Holdings, Inc. This definition is highly specific, meaning the exemption does not automatically extend to other issuances, tenors, or guarantors.
- “securities”: Uses the same meaning as in section 239(1) of the Act. This ensures the exemption operates within the Act’s established definitional framework.
- “stabilising action”: Defined as an action taken in Singapore or elsewhere by Credit Suisse First Boston (Europe) Limited (or 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 compliance perspective, the definition of “stabilising action” is both actor-specific and purpose-specific. The exemption is limited to stabilisation activities undertaken by the named entity (and related corporations) and must be directed at stabilising or maintaining market price.
Section 3 (Exemption) is the operative provision. It states that sections 197 and 198 of the Act shall not apply to stabilising action taken in respect of any of the Notes, within 30 days from the date of issue of the Notes, provided the stabilising action is taken with one of the following categories of persons:
- (a) an institutional investor
- (b) a relevant person as defined in section 275(2) of the Act
- (c) a person who acquires the Notes as principal, but only where the consideration 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
Practically, Section 3 does two things at once:
- Time-limits the exemption to the first 30 days after issuance.
- Restricts counterparties to institutional investors, “relevant persons”, or high-value principal acquirers (with a minimum consideration threshold).
For lawyers advising issuers, arrangers, or market participants, these conditions are the compliance “gates.” If stabilising trades occur outside the 30-day period, or with counterparties outside the specified categories, the exemption may not apply and the conduct could fall back within the prohibitions of sections 197 and 198 of the Act.
How Is This Legislation Structured?
This Regulations instrument is structured in a conventional, short form with only three sections:
- Section 1 provides the citation and commencement.
- Section 2 provides definitions that determine the scope of the exemption (notably “Notes” and “stabilising action”).
- Section 3 sets out the exemption from specified Act provisions, including the time window and counterparty conditions.
There are no additional parts or schedules in the extract provided. The legal effect is therefore concentrated: the Regulations operate as a narrow carve-out from the Act’s market conduct rules for a defined stabilisation activity relating to a defined notes issuance.
Who Does This Legislation Apply To?
The exemption is relevant to parties involved in stabilising the market price of the specified Notes—primarily Credit Suisse First Boston (Europe) Limited and its related corporations, because the definition of “stabilising action” is tied to that actor. However, the exemption also indirectly affects other market participants because it governs the circumstances under which stabilising trades can be executed without triggering sections 197 and 198 of the Act.
In terms of counterparties, Section 3 limits the exemption to stabilising action taken with institutional investors, relevant persons (as defined in section 275(2) of the Act), or principal acquirers meeting a minimum consideration threshold of $200,000 per transaction (or equivalent). Therefore, the Regulations are most likely to be operationally relevant to trading desks, syndicate desks, and compliance teams that must ensure counterparties and trade documentation align with these categories.
Why Is This Legislation Important?
Although the Regulations are brief, they are significant because stabilisation is a high-scrutiny area of market conduct regulation. Without an exemption, stabilising trades could be argued to fall within prohibitions designed to prevent market manipulation or misleading market signals. By carving out stabilising action under controlled conditions, MAS enables legitimate market-making/stabilisation practices while maintaining regulatory safeguards.
For practitioners, the key value of this instrument lies in its precision. It does not create a broad permission to stabilise any security. Instead, it provides a carefully bounded exemption tied to:
- Specific Notes (issuer, guarantor, tenor, and issuance size);
- Specific stabiliser (Credit Suisse First Boston (Europe) Limited and related corporations);
- Specific conduct (buying, offering, or agreeing to buy to stabilise or maintain market price);
- Specific timing (within 30 days from issue); and
- Specific counterparties (institutional investors, relevant persons, or principal acquirers meeting the $200,000 threshold).
From an enforcement and risk standpoint, the narrowness means that compliance failures—such as trading with the wrong counterparty type, trading after the 30-day period, or stabilising a different instrument—could expose the stabiliser and potentially other involved parties to regulatory action under the underlying Act provisions. Accordingly, legal advisers should treat this exemption as a checklist-driven permission rather than a general market practice allowance.
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 provided metadata)
- Stabilising Act (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. 3) Regulations 2006 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the official text for authoritative provisions.