Statute Details
- Title: Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Notes) (No. 42) Regulations 2004
- Act Code: SFA2001-S677-2004
- Type: Subsidiary Legislation (SL)
- Authorising Act: Securities and Futures Act (Cap. 289)
- Enacting authority: Monetary Authority of Singapore (MAS)
- Commencement: 4 November 2004
- Enacting provision: Made in exercise of powers under section 337(1) of the Securities and Futures Act
- Key provisions: Section 2 (Definitions); Section 3 (Exemption)
- Regulatory focus: Exemption from market conduct rules for stabilising actions relating to specified notes
- Specified instruments: “Notes” defined as 10-year guaranteed fixed rate senior notes due November 2014 issued by SPI Electricity & Gas Australia Holdings Pty Ltd under a US$1.5 billion Medium Term Note Programme
What Is This Legislation About?
The Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Notes) (No. 42) Regulations 2004 is a narrowly targeted regulatory instrument. In plain terms, it creates a specific exemption from certain “market conduct” restrictions under the Securities and Futures Act (the “SFA”) for stabilising activities carried out in relation to a particular bond issuance.
Stabilising action is a common market practice in capital markets. It typically involves limited buying (or offers to buy) by a stabilising agent to help maintain or support the market price of newly issued securities during the early period after issuance. Without an exemption, general market conduct prohibitions could inadvertently capture these stabilisation activities and render them unlawful or require complex structuring.
This Regulations’ scope is deliberately constrained. It does not provide a general stabilisation regime for all securities. Instead, it defines a particular set of “Notes” and a particular stabilising actor (Morgan Stanley & Co. International Limited and related corporations) and then grants an exemption only for stabilising actions taken within a specified time window after issuance, and only in relation to specified categories of counterparties.
What Are the Key Provisions?
Section 1 (Citation and commencement) provides the short title and the date the Regulations come into operation. The Regulations may be cited as “Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Notes) (No. 42) Regulations 2004” and they commenced on 4 November 2004. For practitioners, commencement matters because it determines whether stabilising conduct falls within the legal framework at the relevant time.
Section 2 (Definitions) is central because the exemption is only as broad as the defined terms. Two definitions drive the entire instrument:
- “Notes” are defined very specifically as the 10-year guaranteed fixed rate senior notes due November 2014 issued by SPI Electricity & Gas Australia Holdings Pty Ltd for a principal amount of up to US$400 million under its US$1,500,000,000 Medium Term Note Programme.
- “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 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. First, the exemption is instrument-specific: if the stabilising activity relates to different notes, the exemption will not apply. Second, the exemption is actor-specific: stabilising action must be taken by Morgan Stanley & Co. International Limited or its related corporations. If a different entity performs the stabilisation (even if economically similar), the exemption may not be available.
Section 3 (Exemption) is the operative provision. It states that Sections 197 and 198 of the SFA 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 carried out with either:
- (a) a person referred to in section 274 of the SFA; or
- (b) a sophisticated investor as defined in section 275(2) of the SFA.
Although the extract does not reproduce Sections 197, 198, 274, and 275, the structure indicates that the SFA contains market conduct prohibitions (Sections 197 and 198) that would otherwise restrict certain dealing practices. This Regulations provides a targeted carve-out for stabilising activity, but only when the counterparties fall within the SFA’s specified categories (section 274 persons) or are sophisticated investors.
For practitioners, the key compliance questions are therefore:
- Timing: Was the stabilising action taken within 30 days from the date of issue?
- Instrument: Do the securities being stabilised fall within the defined “Notes”?
- Actor: Is the stabilising action taken by Morgan Stanley & Co. International Limited or its related corporations?
- Counterparty: Is the stabilising dealing with a person under section 274 or with a sophisticated investor under section 275(2)?
How Is This Legislation Structured?
The Regulations are structured as a short, three-section instrument:
- Section 1 sets out the citation and commencement.
- Section 2 provides definitions that precisely delimit the scope of “Notes” and “stabilising action”.
- Section 3 contains the exemption, specifying which SFA provisions are disapplied, the time window, and the permitted categories of counterparties.
Notably, there are no additional schedules, reporting obligations, or procedural steps in the extract. This is consistent with the function of many market conduct exemption regulations: they operate as a legal “switch” that removes the application of specified prohibitions for a defined set of circumstances.
Who Does This Legislation Apply To?
In practical terms, the Regulations apply to parties involved in stabilising the defined Notes—most directly, the stabilising agent and its related corporations. Because “stabilising action” is defined by reference to Morgan Stanley & Co. International Limited and its related corporations, the exemption is primarily relevant to that group’s dealing activities.
However, the exemption is also conditioned by the counterparty category. Stabilising action must be taken with either a person referred to in section 274 of the SFA or with a sophisticated investor under section 275(2). This means that even if the stabilising agent and the Notes match the definitions, the exemption may fail if the stabilising trades are executed with counterparties outside those categories.
Why Is This Legislation Important?
This Regulations is important because it clarifies the legal permissibility of a specific stabilisation practice in Singapore’s market conduct framework. Stabilisation is often necessary to support orderly price formation in the immediate aftermath of issuance. By carving out stabilising action from Sections 197 and 198 of the SFA, MAS reduces regulatory uncertainty and enables market participants to conduct stabilisation in a controlled and legally authorised manner.
From a compliance perspective, the Regulations demonstrates how Singapore’s market conduct rules can be calibrated through targeted exemptions rather than broad deregulation. The exemption is limited by (i) instrument, (ii) stabilising actor, (iii) time window, and (iv) counterparty type. This layered approach helps ensure that stabilisation does not become a general mechanism for circumventing market integrity rules.
For lawyers advising issuers, dealers, or stabilising agents, the Regulations provides a clear checklist for assessing whether stabilising activity is covered. It also highlights the need for careful documentation: the dealing records should support that the trades were within 30 days from the date of issue, were in respect of the defined Notes, were carried out by the defined stabilising entity, and were executed with eligible counterparties.
Related Legislation
- Securities and Futures Act (Cap. 289) — in particular:
- Sections 197 and 198 (market conduct provisions disapplied by this Regulations)
- Sections 274 and 275(2) (counterparty categories for the exemption)
- Section 337(1) (authorising power for MAS to make such regulations)
- Futures Act (referenced in the provided metadata as related legislation)
- Stabilising Act (referenced in the provided metadata as related legislation)
- Timeline (referenced in the provided metadata as related legislation)
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. 42) Regulations 2004 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the official text for authoritative provisions.