Statute Details
- Title: Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Notes) (No. 45) Regulations 2005
- Act Code: SFA2001-S699-2005
- Legislation Type: Subsidiary Legislation (SL)
- Authorising Act: Securities and Futures Act (SFA) (specifically powers under section 337(1))
- Commencement: 4 November 2005
- Status: Current version as at 27 March 2026 (per the provided extract)
- SL Number: SL 699/2005
- Enacting Authority: Monetary Authority of Singapore (MAS)
- Key Provisions:
- Section 1: Citation and commencement
- Section 2: Definitions (notably “Notes” and “stabilising action”)
- Section 3: Exemption from sections 197 and 198 of the SFA for specified stabilising action
What Is This Legislation About?
The Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Notes) (No. 45) Regulations 2005 is a targeted regulatory instrument. In plain language, it creates a limited exemption from certain market conduct rules in the Securities and Futures Act (SFA) for stabilising activities carried out in relation to a specific set of debt securities (“Notes”).
Market conduct provisions in the SFA generally aim to prevent manipulation and improper trading practices that could distort prices or mislead investors. However, in certain capital markets transactions—particularly bond or note issuances—market participants may engage in “stabilising action” to help maintain orderly trading conditions shortly after issuance. This Regulations package recognises that stabilisation, when properly constrained, can serve a legitimate market function.
Accordingly, the Regulations carve out an exemption for stabilising action taken within a defined time window (30 days from the date of issue) and by specified categories of counterparties/investors. The exemption is narrow: it applies only to stabilising action in respect of the defined “Notes” and only to the extent the stabilising action falls within the defined actors and conditions.
What Are the Key Provisions?
Section 1 (Citation and commencement) provides the formal citation and makes the Regulations effective on 4 November 2005. For practitioners, this matters when assessing whether stabilising trades were conducted after the Regulations came into force, and therefore whether the exemption could be relied upon for conduct occurring in the relevant post-issuance period.
Section 2 (Definitions) is central because it determines the scope of the exemption. The Regulations define three key concepts:
- “Notes”: The Regulations specify the exact instrument—the 5-year guaranteed notes due November 2010 issued by Nan Ya Plastics (Hong Kong) Company Limited up to US$400 million, guaranteed by Nan Ya Plastics Corporation. This is not a general exemption for any notes; it is instrument-specific.
- “securities”: This adopts the meaning in section 239(1) of the SFA, ensuring the exemption operates within the SFA’s definitional framework.
- “stabilising action”: This is defined as actions taken in Singapore or elsewhere by specified financial institutions—Citigroup Global Markets Limited, Deutsche Bank AG, Singapore Branch, The Hongkong and Shanghai Banking Corporation Limited, or their related corporations—to buy or to offer or agree to buy the Notes in order to stabilise or maintain the market price of the Notes in Singapore or elsewhere.
From a compliance perspective, the definition is both actor-specific and purpose-specific. A party outside the listed stabilising entities (or not acting through a related corporation) would not automatically fall within the exemption. Likewise, trades must be connected to the stabilisation objective—i.e., maintaining or stabilising market price—rather than ordinary proprietary trading or hedging without the stabilisation intent.
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 the Notes within 30 days from the date of issue, provided the stabilising action is taken with one of the following categories of counterparties:
- (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, 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
Practically, this means the exemption is not a blanket permission to stabilise with any market participant. It is limited to transactions involving institutional investors, “relevant persons” (a defined SFA category), or principal purchasers meeting a minimum consideration threshold. The $200,000 threshold is particularly important for structuring and documentation: it sets a quantitative gate that can be tested after the fact.
Also, the exemption is time-bound. The stabilising action must occur within 30 days from the date of issue. For lawyers advising issuers, arrangers, or stabilising agents, this requires careful reconciliation of trade dates against the issuance date and the stabilisation programme timeline.
Finally, the exemption is framed as a carve-out from sections 197 and 198 of the SFA. While the extract does not reproduce those sections, the legal effect is clear: the stabilising action that meets the defined conditions is treated as not subject to the prohibitions or restrictions contained in those provisions. In practice, this reduces the risk that stabilising trades could be characterised as market misconduct, provided the exemption conditions are satisfied.
How Is This Legislation Structured?
The Regulations are short and structured as a three-section instrument:
- Section 1 sets out the citation and commencement.
- Section 2 provides definitions that determine the scope of “Notes” and “stabilising action”, and links “securities” to the SFA’s definitional provisions.
- Section 3 contains the exemption—the operative legal mechanism—specifying the time window, the Notes to which it applies, the stabilising actors, and the categories of counterparties/transaction thresholds.
Because the Regulations are so concise, practitioners should read them together with the relevant SFA provisions referenced (sections 197, 198, 239(1), 275(2), and 337(1)). The exemption’s meaning depends heavily on those cross-references.
Who Does This Legislation Apply To?
In scope are stabilising actions taken in respect of the defined “Notes” by the defined stabilising entities (or their related corporations) and carried out within the specified time period. The exemption is therefore most relevant to:
- the listed stabilising institutions and their related corporations;
- persons trading or dealing with those institutions in the relevant stabilisation period; and
- counterparties that fall within the categories in section 3 (institutional investors, “relevant persons”, or principal purchasers meeting the $200,000 threshold).
Although the exemption is drafted as a carve-out from the SFA’s market conduct provisions, its practical beneficiaries include issuers and arrangers who need regulatory certainty that stabilisation can be conducted without triggering market misconduct prohibitions—provided the stabilisation programme is properly designed and executed.
For lawyers, the key question is not only whether a trade was “stabilising” in a commercial sense, but whether it fits the legal definition and the counterparty/consideration categories. Parties outside the defined stabilising actors, or trades outside the 30-day window, would not benefit from the exemption.
Why Is This Legislation Important?
This Regulations instrument is important because it provides regulatory certainty for a specific note issuance and stabilisation programme. Without an exemption, stabilising trades could potentially be scrutinised under market conduct prohibitions. By explicitly exempting stabilising action that meets defined conditions, MAS reduces ambiguity and helps market participants manage compliance risk.
From a market integrity perspective, the exemption is also constrained. It is limited to a particular instrument (the Nan Ya Plastics guaranteed notes), a defined stabilising actor set, a short post-issuance period (30 days), and specified counterparty categories. These limitations reflect a balance between allowing legitimate price support mechanisms and preventing manipulative conduct.
For practitioners advising on documentation and compliance, the Regulations highlight several practical tasks:
- Confirm the instrument: ensure the Notes match the defined description (issuer, guarantee, maturity, and issuance size).
- Confirm the stabilising party: ensure the stabilising action is taken by one of the listed entities or their related corporations.
- Confirm the timing: verify that stabilising trades occur within 30 days from the date of issue.
- Confirm the counterparty category: institutional investor, relevant person, or principal purchaser meeting the $200,000 threshold (including how consideration is measured and documented).
In short, the Regulations are a narrowly tailored compliance “safe harbour” for stabilisation in a particular transaction context.
Related Legislation
- Securities and Futures Act (SFA) (Cap. 289) — including:
- section 337(1) (authorising power)
- sections 197 and 198 (market conduct provisions from which the exemption applies)
- section 239(1) (definition of “securities”)
- section 275(2) (definition of “relevant person”)
- Futures Act (mentioned in the provided metadata as related context)
- Stabilising Act (mentioned in the provided metadata as related context)
- Timeline / Legislation timeline (for version verification, as referenced in the extract)
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. 45) Regulations 2005 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the official text for authoritative provisions.