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
- Type: Subsidiary Legislation (SL)
- Authorising Act: Securities and Futures Act (Cap. 289)
- Enacting power: Section 337(1) of the Securities and Futures Act
- Commencement: 23 September 2004
- Key provisions: Section 2 (definitions); Section 3 (exemption)
- Status: Current version as at 27 March 2026 (per provided extract)
- Legislative instrument: SL 587/2004
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 is a targeted regulatory instrument. In plain terms, it creates a narrow exemption from certain “market conduct” restrictions in the Securities and Futures Act for a specific type of activity—namely, stabilising purchases or offers—carried out in relation to a defined bond/notes issuance.
Stabilising action is a common feature of securities issuance. During the initial period after a new issue, market participants may intervene to support or maintain the trading price. However, stabilisation can resemble prohibited conduct if not properly constrained. This Regulations therefore balances two policy goals: (i) allowing stabilisation to support orderly markets, and (ii) preventing stabilisation from being used to mislead investors or manipulate prices.
Crucially, the exemption is not general. It is tied to a particular notes issuance and to stabilising action taken by a particular entity (Morgan Stanley & Co. International Limited and its related corporations). The exemption also applies only within a defined time window—30 days from the date of issue.
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. 39) Regulations 2004” and come into operation on 23 September 2004. For practitioners, this matters when assessing whether stabilising conduct occurred within the legal framework and whether any transitional or timing arguments could arise.
Section 2 (Definitions) sets the scope of the exemption by defining two central terms: “Notes” and “stabilising action”.
“Notes” are defined very specifically as the subordinated notes due November 2019 issued by DBS Bank Ltd. for a principal amount of up to US$1.2 billion. This specificity is legally significant: the exemption is not available for other DBS issuances, other maturities, or other note structures. A lawyer advising on compliance must therefore confirm the exact instrument being traded and whether it falls within the defined “Notes”.
“Stabilising action” is defined 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. This definition is broad enough to include not only actual purchases but also offers or agreements to buy. It also captures stabilisation occurring outside Singapore, provided the action is taken by the specified entity and relates to 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 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 with one of two categories of counterparties/participants:
- (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, Section 3 creates a compliance “safe harbour” (though drafted as an exemption) for stabilisation activity that would otherwise fall within the prohibitions or restrictions in Sections 197 and 198. The exemption is time-limited (30 days) and counterparty-limited (section 274 persons or sophisticated investors). For legal advisers, this is the core compliance checklist: stabilisation must (i) relate to the defined Notes, (ii) be undertaken by the defined stabilising actor, (iii) occur within the 30-day window from issue, and (iv) involve permitted counterparties.
Although the extract does not reproduce Sections 197 and 198 of the Securities and Futures Act, the structure indicates that those sections impose market conduct constraints that could otherwise capture stabilising purchases or related conduct. The Regulations therefore operate as a carve-out, allowing stabilisation without breaching the Act—provided the conditions are met.
How Is This Legislation Structured?
The Regulations are short and consist of an enacting formula and three substantive provisions:
- Section 1 sets out citation and commencement.
- Section 2 provides definitions that determine the scope of the exemption.
- Section 3 provides the exemption from Sections 197 and 198 of the Securities and Futures Act, subject to time and counterparty conditions.
From a practitioner’s perspective, the structure reflects a typical Singapore approach for targeted exemptions: define the instrument and the activity precisely, then carve out the relevant statutory prohibitions for a limited period and limited participant categories.
Who Does This Legislation Apply To?
While the Regulations are made under the Securities and Futures Act, their operative effect is directed at stabilising action in relation to the defined DBS subordinated notes. The exemption is available only for stabilising action taken by Morgan Stanley & Co. International Limited or its related corporations. Accordingly, the primary compliance audience is the stabilising dealer/arranger and its related entities that may execute stabilisation trades.
Additionally, the exemption is conditional on the stabilising action being taken with counterparties that fall within section 274 of the Act or are sophisticated investors under section 275(2). This means that even if the stabilising actor and the Notes are correct, the exemption may not apply if the trades are executed with the wrong counterparty category. Lawyers should therefore coordinate with trading desks and documentation teams to ensure the counterparty classification is properly evidenced.
Why Is This Legislation Important?
This Regulations is important because it clarifies when stabilisation activity is legally permissible in Singapore for a specific notes issuance. Without an exemption, stabilisation could be argued to fall within statutory market conduct prohibitions, potentially exposing the stabilising dealer and related entities to regulatory action or enforcement risk.
From a market integrity standpoint, the Regulations demonstrates how Singapore regulates price support activities: it does not prohibit stabilisation outright, but it constrains it through (i) instrument specificity (the defined DBS notes), (ii) actor specificity (Morgan Stanley and related corporations), (iii) time limitation (30 days from issue), and (iv) counterparty limitation (section 274 persons or sophisticated investors). These constraints reduce the risk that stabilisation becomes a vehicle for manipulation or unfair dealing.
For practitioners, the most practical value lies in compliance planning and documentation. When advising on a notes issuance where stabilisation is contemplated, counsel should verify whether a relevant exemption exists (or whether a different exemption or authorisation is needed). Where this Regulations applies, counsel should ensure that trading activity is tracked against the 30-day window, that the notes traded match the defined “Notes”, and that counterparties are within the permitted categories. In disputes or regulatory investigations, these factual elements are often determinative.
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 provided metadata)
- Stabilising Act (as referenced in the provided metadata)
- Timeline (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. 39) Regulations 2004 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the official text for authoritative provisions.