Statute Details
- Title: Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Notes) (No. 40) Regulations 2004
- Act Code: SFA2001-S588-2004
- Legislation Type: Subsidiary legislation (SL)
- Authorising Act: Securities and Futures Act (SFA) (notably section 337(1))
- Enacting Authority: Monetary Authority of Singapore (MAS)
- Citation: SL 588/2004
- Commencement: 24 September 2004
- Status: Current version as at 27 March 2026 (per provided extract)
- Key Provisions: Section 2 (Definitions); Section 3 (Exemption)
What Is This Legislation About?
The Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Notes) (No. 40) Regulations 2004 (“Stabilising Action Exemption Regulations”) is a targeted regulatory instrument made under the Securities and Futures Act 2001 (“SFA”). In plain language, it creates a specific exemption from certain market conduct rules when particular parties engage in “stabilising action” in relation to a defined set of debt securities (“Notes”).
Stabilising action is a practice commonly used during or shortly after the issuance of securities. Market participants may buy (or offer to buy) securities to help maintain orderly trading and reduce excessive price volatility. Without an exemption, such conduct could potentially fall within prohibitions or restrictions designed to prevent market manipulation or unfair dealing.
This legislation does not establish a general stabilisation regime for all securities. Instead, it is narrowly drafted: it applies only to stabilising action taken in respect of a particular issuance of 7-year US dollar guaranteed senior notes issued by Panva Gas Holdings Limited, and only within a defined time window after issuance. It also limits the categories of persons who may rely on the exemption.
What Are the Key Provisions?
1. Citation and commencement (Regulation 1)
The Regulations may be cited as the “Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Notes) (No. 40) Regulations 2004” and come into operation on 24 September 2004. For practitioners, this matters primarily for determining whether conduct occurred after the exemption became available.
2. Definitions (Regulation 2)
Regulation 2 is crucial because it defines both the subject matter (“Notes”) and the conduct (“stabilising action”). The definition of “Notes” is highly specific: it refers to 7-year US dollar guaranteed senior notes due September 2011 issued by Panva Gas Holdings Limited for a principal amount of up to US$200 million, guaranteed by a specified group of guarantors (including China Pan River Group Limited, China Overlink Holdings Co., Limited, Sinolink LPG Investment Limited, Singkong Investments Limited, and Sinolink Power Investment Limited). This specificity indicates that the exemption is not intended to be reused for other note issuances.
The definition of “stabilising action” is also narrow. It means 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. The inclusion of “offer or agree to buy” is significant: it captures not only actual purchases but also pre-commitments that could otherwise be treated as potentially problematic under market conduct rules.
3. The exemption from sections 197 and 198 of the SFA (Regulation 3)
The operative provision is Regulation 3. 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, with two alternative eligibility pathways:
- (a) the stabilising action is taken by a person referred to in section 274 of the Act; or
- (b) the stabilising action is taken by a “sophisticated investor” as defined in section 275(2) of the Act.
From a practitioner’s perspective, the exemption is best understood as a conditional “carve-out” from the prohibitions or restrictions contained in sections 197 and 198. While the extract does not reproduce those sections, the legislative design is clear: the SFA contains market conduct provisions that could restrict certain trading or dealing behaviours, and this Regulations instrument removes those restrictions for a limited stabilisation purpose, limited time, limited security, and limited participants.
Time limitation (30 days from date of issue)
The exemption is explicitly time-bound. Stabilising action must be taken within 30 days from the date of issue of the Notes. This is a common feature of stabilisation exemptions: it aims to permit short-term price support during the initial trading period while reducing the risk of longer-term manipulation.
Person eligibility (section 274 persons or sophisticated investors)
The exemption is also participant-limited. It does not automatically apply to any market actor. Instead, it requires that the stabilising action be taken by a person falling within the categories referenced in section 274 of the SFA, or by a sophisticated investor. This dual pathway suggests that the SFA’s market conduct framework distinguishes between different classes of persons and that the exemption is calibrated to those classes.
Geographic scope (Singapore or elsewhere)
The definition of stabilising action includes actions taken “in Singapore or elsewhere,” and the purpose may be to stabilise or maintain the market price “in Singapore or elsewhere.” This matters for cross-border issuance and trading: the exemption is not limited to stabilisation conducted only within Singapore.
How Is This Legislation Structured?
The Regulations are structured in a straightforward, short-form manner, consistent with many targeted exemptions:
- Regulation 1 (Citation and commencement): establishes the short title and the date the Regulations come into force.
- Regulation 2 (Definitions): defines the scope of “Notes” and “stabilising action,” including the specific issuer, security characteristics, guarantors, and the stabilising entity (Merrill Lynch and related corporations).
- Regulation 3 (Exemption): provides the exemption from the application of specific SFA provisions (sections 197 and 198) when the defined stabilising action is carried out within the specified time period and by eligible persons.
Notably, the Regulations do not contain additional procedural requirements, reporting obligations, or detailed stabilisation mechanics in the extract provided. Practitioners should therefore treat compliance as primarily a matter of fitting within the defined terms and conditions, while also ensuring that any other applicable SFA requirements (outside sections 197 and 198) are met.
Who Does This Legislation Apply To?
In practical terms, the Regulations apply to parties involved in stabilising action relating to the defined Notes. The definition of “stabilising action” points to Merrill Lynch, Pierce, Fenner & Smith Incorporated and its related corporations as the stabilising entity. Therefore, the exemption is most relevant to that group and any related corporations acting in the stabilisation capacity described.
However, Regulation 3 adds an additional eligibility filter based on the identity of the person taking the stabilising action. The exemption is available only where the stabilising action is taken by a person referred to in section 274 of the SFA or by a sophisticated investor under section 275(2) of the SFA. Accordingly, even if the stabilisation activity is conceptually “stabilising action,” the exemption will not be available unless the actor fits within the relevant SFA-defined categories.
Why Is This Legislation Important?
This Regulations instrument is important because it clarifies when otherwise prohibited or restricted market conduct rules do not apply. For issuers, underwriters, and trading desks, stabilisation can be a legitimate market practice—particularly during the early period after issuance—yet it can also resemble conduct that regulators scrutinise as potentially manipulative. By carving out a defined stabilisation activity, the Regulations provide legal certainty for a narrow set of circumstances.
For practitioners advising on underwriting documentation, trading policies, and compliance controls, the key practical value lies in the precision of the exemption. The exemption is limited to: (i) a specific note issuance (issuer, maturity, currency, amount, and guarantors); (ii) stabilising action by a specified stabilising firm (Merrill Lynch and related corporations); (iii) a strict 30-day window from the date of issue; and (iv) eligible person categories (section 274 persons or sophisticated investors). These constraints mean that compliance teams must verify facts carefully—particularly the date of issue, the identity of the actor, and whether the Notes match the statutory definition.
From an enforcement perspective, the Regulations also signal regulatory intent. MAS is effectively permitting stabilisation in a controlled manner while maintaining the general market conduct prohibitions elsewhere. If stabilising activity falls outside the exemption—such as stabilisation beyond 30 days, stabilisation involving different securities, or stabilisation by ineligible persons—sections 197 and 198 of the SFA would presumably apply, exposing the actor to potential regulatory action or other legal consequences.
Related Legislation
- Securities and Futures Act 2001 (notably sections 197, 198, 274, 275(2), and the regulation-making power in section 337(1))
- Futures Act (listed in metadata as related legislation)
- Stabilising Act (listed in metadata as related legislation)
- Legislation Timeline (for version control and amendment history)
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. 40) Regulations 2004 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the official text for authoritative provisions.