Statute Details
- Title: Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Notes) (No. 39) Regulations 2004
- Act Code: SFA2001-S587-2004
- Legislative Type: Subsidiary Legislation (SL)
- Authorising Act: Securities and Futures Act (SFA) 2001 (specifically section 337(1))
- Legislation Number: SL 587/2004
- Commencement: 23 September 2004
- Status: Current version as at 27 March 2026 (per the provided extract)
- Key Provisions: Section 1 (citation and commencement), Section 2 (definitions), Section 3 (exemption)
- Enacting Authority: Monetary Authority of Singapore (MAS)
What Is This Legislation About?
The Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Notes) (No. 39) Regulations 2004 (“Stabilising Action (Notes) 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 activities in connection with a specific issuance of notes.
Stabilisation is a common feature of certain capital markets transactions. When new securities are issued, market makers or underwriters may take steps to support or “stabilise” the trading price in the immediate aftermath of issuance. However, stabilising conduct can resemble prohibited market manipulation if it is not carefully bounded. The SFA therefore contains provisions aimed at preventing misleading or manipulative trading practices, including rules that regulate dealings and related conduct.
This Regulations’ purpose is to permit stabilising action in respect of a defined set of notes—DBS Bank Ltd’s subordinated notes due November 2019—during a limited time window after issuance, provided the stabilising action is carried out by specified persons and within the statutory timeframe. The exemption is not general; it is transaction-specific and tightly defined by the identity of the notes and the stabilising actor.
What Are the Key Provisions?
Section 1 (Citation and commencement) provides the formal name and the date the Regulations came into operation. The Regulations may be cited as the “Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Notes) (No. 39) Regulations 2004” and they came into operation on 23 September 2004. For practitioners, this matters when assessing whether stabilising conduct occurred within the legal framework.
Section 2 (Definitions) is central because it defines both the subject matter (“Notes”) and the conduct (“stabilising action”). The Regulations define “Notes” as the subordinated notes due November 2019 issued by DBS Bank Ltd for a principal amount of up to US$1.2 billion. This definition is highly specific: it ties the exemption to a particular issuance and quantum, reducing ambiguity about what securities are covered.
Section 2 also defines “stabilising action” as an action taken in Singapore or elsewhere by Morgan Stanley & Co. International Limited (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 from this definition. First, the exemption is limited to stabilisation by Morgan Stanley (and its related corporations), not by any market participant. Second, the conduct can occur outside Singapore, but it must still be aimed at stabilising or maintaining the market price of the Notes (including in Singapore).
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, provided the stabilising action is taken with 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.
Although the extract does not reproduce Sections 197 and 198 of the SFA, the legal effect is clear: the Regulations carve out stabilising action from the application of those market conduct provisions. The exemption is conditional on three elements: (1) the stabilising action must relate to the defined Notes; (2) it must be taken within the 30-day period from the date of issue; and (3) the counterparty must fall within the permitted categories—either persons under section 274 of the SFA or sophisticated investors under section 275(2).
For a practitioner, the counterparty condition is often where compliance work concentrates. The exemption does not simply authorise stabilisation against “anyone”; it restricts stabilising dealings to specified categories of counterparties. This helps ensure that stabilisation does not operate as a backdoor mechanism for prohibited trading with retail or otherwise non-qualifying participants.
How Is This Legislation Structured?
The Regulations are structured as a short, three-section instrument:
Section 1 sets out the citation and commencement date.
Section 2 contains definitions that determine the scope of the exemption—specifically, what “Notes” are covered and what counts as “stabilising action”.
Section 3 provides the exemption itself, identifying the SFA provisions disapplied (Sections 197 and 198), the time limit (30 days from issue), the permitted stabilising actor (through the definition in Section 2), and the permitted counterparties (section 274 persons or sophisticated investors under section 275(2)).
Notably, the Regulations do not create additional procedural requirements in the extract provided. Instead, they rely on the SFA’s broader market conduct framework and the defined conditions in this instrument.
Who Does This Legislation Apply To?
In practical terms, the Regulations apply to parties involved in stabilising dealings in the covered Notes, but the exemption is drafted in a way that primarily benefits the stabilising actor identified in the definition of “stabilising action”—Morgan Stanley & Co. International Limited and its related corporations. If such entities take stabilising action that falls within the definition, they may rely on the exemption from Sections 197 and 198 of the SFA, subject to the conditions in Section 3.
The Regulations also indirectly apply to counterparties because the exemption is conditional on the stabilising action being taken with a person referred to in section 274 of the SFA or with a sophisticated investor under section 275(2). Therefore, investment banks, dealers, and transaction counterparties must assess whether their counterparties qualify and whether the stabilising trades are executed within the 30-day window from the date of issue.
Why Is This Legislation Important?
This Regulations is important because it demonstrates how Singapore law balances two competing policy objectives: (1) allowing legitimate market practices that support orderly price formation after issuance, and (2) preventing market manipulation and improper dealing. By disapplying specific SFA provisions for a limited period and for a defined set of securities and counterparties, the Regulations provide legal certainty for stabilisation activities that would otherwise risk breaching the general market conduct rules.
For practitioners advising issuers, underwriters, or dealers, the key value of the Regulations lies in its precision. The exemption is not open-ended. It is tied to a particular instrument (DBS subordinated notes due November 2019, up to US$1.2 billion) and a particular stabilising actor (Morgan Stanley and related corporations). It also imposes a temporal limitation (30 days from issue) and a counterparty limitation (section 274 persons or sophisticated investors). These constraints are the compliance “guardrails” that counsel must operationalise.
From an enforcement and risk perspective, the Regulations reduce uncertainty but do not eliminate it. If stabilising action falls outside the definition—such as stabilisation by a different entity, stabilisation outside the 30-day period, or dealings with non-qualifying counterparties—then the exemption would not apply, and Sections 197 and 198 of the SFA would remain relevant. Accordingly, transaction documentation, trade allocation records, and counterparty eligibility checks become critical evidence of compliance.
Related Legislation
- Securities and Futures Act (SFA) 2001 (notably Sections 197, 198, 274, 275(2), and the regulation-making power in section 337(1))
- Futures Act (listed in the provided metadata as related legislation)
- Stabilising Act (listed 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. 39) Regulations 2004 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the official text for authoritative provisions.