Statute Details
- Title: Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Notes) (No. 43) Regulations 2005
- Act Code: SFA2001-S694-2005
- Type: Subsidiary Legislation (sl)
- Authorising Act: Securities and Futures Act (SFA) (notably section 337(1))
- Commencement: 2 November 2005
- Enacting date: Made on 31 October 2005
- Regulator: Monetary Authority of Singapore (MAS)
- Key provisions:
- Section 1: Citation and commencement
- Section 2: Definitions (including “Notes” and “stabilising action”)
- Section 3: Exemption from sections 197 and 198 of the SFA for specified stabilising action
- Regulatory focus: Market conduct rules for stabilising purchases relating to a specific issuance of government notes
- Instrument reference: SL 694/2005
What Is This Legislation About?
The Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Notes) (No. 43) Regulations 2005 (“the Regulations”) is a targeted exemption instrument made under the Securities and Futures Act (SFA). In essence, it carves out a narrow permission for certain market participants to undertake “stabilising action” in relation to a particular set of notes issued by the Government of the Socialist Republic of Vietnam in November 2005.
In plain language, the SFA contains market conduct provisions designed to prevent manipulative or improper trading practices. However, stabilisation activities—when conducted in a controlled and time-limited manner—are sometimes permitted in capital markets to help maintain orderly trading and reduce volatility immediately after issuance. This is particularly relevant for bond/notes offerings where initial market liquidity may be thin.
The Regulations therefore do not rewrite the SFA’s market conduct framework. Instead, they specify that certain stabilising actions will not be caught by two particular SFA provisions (sections 197 and 198), provided the stabilising activity meets the defined scope, participants, and timing requirements set out in section 3.
What Are the Key Provisions?
1. Citation and commencement (Section 1)
Section 1 provides the short title and states that the Regulations came into operation on 2 November 2005. For practitioners, this matters mainly for determining whether the exemption was available for stabilising actions taken after commencement and within the time window specified in section 3.
2. Definitions (Section 2)
Section 2 is critical because the exemption in section 3 depends entirely on the defined terms. Three definitions drive the scope:
(a) “Notes”
“Notes” are defined narrowly as US$ notes issued in November 2005 by The Government of the Socialist Republic of Vietnam for a principal amount of up to US$750 million. This means the exemption is not general-purpose; it is tied to a specific issuance and currency/size parameters.
(b) “securities”
“securities” has the same meaning as in section 239(1) of the SFA. This cross-reference ensures that the SFA’s established definitional framework is used, rather than creating a new concept.
(c) “stabilising action”
“Stabilising action” is defined as an action taken in Singapore or elsewhere by Credit Suisse First Boston (Europe) Ltd (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 both participant-specific and purpose-specific:
- Participant-specific: only Credit Suisse First Boston (Europe) Ltd and related corporations are within scope.
- Purpose-specific: the action must be taken to stabilise or maintain market price.
- Conduct-specific: the action must involve buying (or offering/agreement to buy).
- Geographical scope: it may occur in Singapore or elsewhere, but the stabilisation objective can relate to market price in Singapore or elsewhere.
3. The exemption (Section 3)
Section 3 is the operative provision. It provides 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 of the Notes, with respect to specified categories of persons.
The exemption is therefore structured around three cumulative elements:
- Subject matter: stabilising action in respect of the defined “Notes”.
- Time limit: stabilising action must be taken within 30 days from the date of issue.
- Counterparty/participant categories: the stabilising action must be taken with one of the listed types of persons.
The categories in section 3 are:
- (a) an institutional investor
- (b) a relevant person as defined in section 275(2) of the SFA
- (c) a person who acquires the Notes as principal, but only where the consideration for the acquisition 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.
Practical implications of the $200,000 threshold
The threshold in section 3(c) is a classic market-conduct safeguard: it limits the exemption to acquisitions by principal investors who are sufficiently “large” (by transaction value) to reduce the risk that stabilisation becomes a vehicle for improper retail-style dealing. The provision also clarifies that the consideration may be paid in cash or by exchange of securities or other assets, which is important for structuring and documentation in note transactions.
What this means for compliance
For counsel advising a stabilising agent or its related corporations, the exemption is not automatic. The exemption only applies if the stabilising activity is (i) within the defined “stabilising action” concept, (ii) in respect of the defined “Notes”, (iii) within the 30-day post-issue period, and (iv) conducted with counterparties falling within the enumerated categories and (where applicable) meeting the $200,000 minimum consideration per transaction.
How Is This Legislation Structured?
The Regulations are short and structured as a three-section instrument:
- Section 1 (Citation and commencement): sets the legal identity of the Regulations and the date they take effect.
- Section 2 (Definitions): defines the key terms that determine the scope of the exemption—most importantly “Notes” and “stabilising action”.
- Section 3 (Exemption): provides the substantive relief from the SFA’s market conduct provisions, specifying the time window and the permitted categories of persons for stabilising dealings.
There are no additional parts or schedules in the extract provided, reflecting the Regulations’ purpose as a narrow, issuance-specific exemption rather than a comprehensive regulatory framework.
Who Does This Legislation Apply To?
Although the Regulations are made under the SFA and refer to “sections 197 and 198”, the exemption is functionally directed at those who would otherwise be subject to those provisions when undertaking stabilising action in relation to the defined Vietnam government notes.
In practice, the exemption is most relevant to:
- Credit Suisse First Boston (Europe) Ltd and its related corporations, because the definition of “stabilising action” is limited to actions taken by them (or related corporations) to buy/offer to buy the Notes for stabilisation purposes.
- Counterparties to stabilising purchases—specifically institutional investors, “relevant persons” (as defined in the SFA), and principal acquirers meeting the $200,000 per transaction consideration threshold.
Because the exemption is tied to a specific issuance (“Notes” issued in November 2005 by the Government of Vietnam up to US$750 million), it does not generally apply to stabilisation of other securities or other issuers. It is therefore best understood as a bespoke regulatory permission for a particular market event.
Why Is This Legislation Important?
From a market conduct perspective, the Regulations illustrate how Singapore’s regulatory approach balances two competing objectives: preventing manipulation and enabling legitimate stabilisation practices. Stabilisation can be a legitimate function in underwriting and distribution arrangements, but it must be tightly bounded to avoid undermining market integrity.
The Regulations’ importance lies in the precision of its boundaries. By defining the Notes narrowly, limiting stabilising action to a specific stabilising entity (Credit Suisse First Boston (Europe) Ltd and related corporations), and imposing a strict 30-day post-issue window, the exemption reduces the risk that stabilisation becomes a continuing or open-ended trading strategy.
For practitioners, the compliance value is equally significant. When advising on stabilisation activities, counsel must map the transaction facts to the statutory definitions and conditions. The $200,000 minimum consideration per transaction (for principal acquirers) and the requirement that counterparties fall within enumerated categories provide concrete decision points for structuring trades, drafting internal approvals, and preparing regulatory records.
Finally, the Regulations demonstrate the mechanism by which MAS can grant targeted exemptions from SFA market conduct provisions. This is useful for lawyers who may encounter similar exemption instruments in other issuance contexts: the drafting pattern—definitions, time limits, and counterparty categories—tends to recur across market conduct exemption regulations.
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)
- Legislation timeline / MAS legislative timeline materials (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. 43) Regulations 2005 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the official text for authoritative provisions.