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
- Type: Subsidiary Legislation (SL)
- Authorising Act: Securities and Futures Act (SFA) (Cap. 289)
- Enacting power: Section 337(1) of the Securities and Futures Act
- Commencement: 4 November 2005
- Legislative status: Current version as at 27 March 2026 (per the legislation portal)
- Key provisions: Section 2 (Definitions); Section 3 (Exemption)
- Regulatory authority: Monetary Authority of Singapore (MAS)
- Regulation number: SL 699/2005
- Relevant Act provisions referenced: Sections 197 and 198 of the Securities and Futures Act
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 narrowly targeted regulatory instrument. In plain terms, it creates a specific exemption from certain market conduct rules in the Securities and Futures Act for “stabilising action” taken in relation to a particular set of debt securities—namely, 5-year guaranteed notes issued by Nan Ya Plastics (Hong Kong) Company Limited and guaranteed by Nan Ya Plastics Corporation.
Stabilising action is a common feature of securities issuance and underwriting. When new securities are issued, market prices can be volatile. Underwriting banks and other market participants may take limited steps to support or stabilise the trading price for a short period. However, market conduct legislation typically prohibits or restricts conduct that could mislead investors or distort market pricing. This Regulations package reconciles those competing objectives by allowing stabilisation in defined circumstances, while still preserving the integrity of the market.
Although the Regulations are short, they are legally significant because they carve out an exemption from the operation of Sections 197 and 198 of the Securities and Futures Act. Practitioners should treat this as a “permission framework” that must be satisfied precisely: the exemption is limited by (i) the identity of the Notes, (ii) the identity of the stabilising actors, and (iii) the time window and investor/transaction thresholds set out in the Regulations.
What Are the Key Provisions?
1. Citation and commencement (Regulation 1)
Regulation 1 provides the short title and states that the Regulations come into operation on 4 November 2005. For practitioners, this matters when assessing whether stabilising conduct occurred within the legal regime applicable at the relevant time.
2. Definitions (Regulation 2)
Regulation 2 is the interpretive backbone of the exemption. It defines three key terms:
- “Notes”: The Regulations specify the Notes with precision—5-year guaranteed notes due November 2010 issued by Nan Ya Plastics (Hong Kong) Company Limited for a principal amount of up to US$400 million, guaranteed by Nan Ya Plastics Corporation. This specificity is critical: the exemption is not general-purpose; it is tied to these particular securities.
- “securities”: The term is linked to the definition in section 239(1) of the Securities and Futures Act. This ensures the exemption operates within the Act’s broader classification framework.
- “stabilising action”: The Regulations define stabilising action as an action taken in Singapore or elsewhere by specified entities—Citigroup Global Markets Limited, Deutsche Bank AG, Singapore Branch, The Hongkong and Shanghai Banking Corporation Limited, or any of their related corporations—by buying, or offering or agreeing to buy, any of the Notes 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. The exemption only covers stabilisation conducted by the listed stabilisers (or their related corporations) and only where the conduct is directed at stabilising or maintaining market price.
3. The exemption from Sections 197 and 198 (Regulation 3)
The operative provision is Regulation 3. It states that Sections 197 and 198 of the Securities and Futures Act 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 taken with one of the following categories of counterparties or transaction structures:
- (a) an institutional investor
- (b) a “relevant person” as defined in section 275(2) of the Act
- (c) a person who acquires the Notes as principal, where the consideration 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
This structure is important. The exemption is not simply “any stabilising action.” It is stabilising action that occurs:
- within the permitted time window (30 days from issue); and
- in transactions involving qualifying counterparties (institutional investors, relevant persons, or principal acquirers meeting the minimum consideration threshold).
Practitioners should also note the drafting technique: the exemption is framed as “Sections 197 and 198 shall not apply” to stabilising action meeting the conditions. That implies that outside those conditions, the general market conduct restrictions in the Act remain fully applicable.
4. Practical compliance implications of the thresholds
The $200,000 minimum consideration threshold in Regulation 3(c) is a transaction-by-transaction test. It is also flexible in payment form: the consideration may be paid in cash or by exchange of securities or other assets. For legal and compliance teams, this means documentation should clearly evidence (i) the principal capacity of the acquirer, (ii) the value of consideration per transaction, and (iii) the method of payment/exchange.
Similarly, the “relevant person” concept requires careful mapping to the statutory definition in section 275(2) of the Act. Because the exemption depends on that classification, counsel should verify counterparties’ status and retain evidence supporting the classification.
How Is This Legislation Structured?
This Regulations instrument is extremely concise. It contains:
- Regulation 1: Citation and commencement (sets the effective date).
- Regulation 2: Definitions (defines “Notes,” “securities,” and “stabilising action”).
- Regulation 3: Exemption (the operative carve-out from Sections 197 and 198 of the Securities and Futures Act, subject to time and counterparty/transaction conditions).
There are no additional parts, schedules, or procedural provisions in the extract provided. The legal effect is therefore concentrated in the definitions and the exemption condition in Regulation 3.
Who Does This Legislation Apply To?
In substance, the Regulations apply to market participants who engage in stabilising action in relation to the specified Notes. The exemption is limited to stabilising actions taken by the defined stabilisers (Citigroup Global Markets Limited, Deutsche Bank AG, Singapore Branch, The Hongkong and Shanghai Banking Corporation Limited, or their related corporations) or by persons acting within that stabiliser group.
Additionally, the exemption is conditional on the nature of the counterparty or acquirer: the stabilising transactions must be with an institutional investor, a “relevant person,” or a principal acquirer meeting the minimum consideration threshold. Therefore, even where a stabiliser undertakes stabilising conduct, the exemption may not apply if the stabilising trades are executed with counterparties outside those categories.
Why Is This Legislation Important?
This Regulations is important because it demonstrates how Singapore’s market conduct framework accommodates legitimate market practices such as stabilisation, while still controlling the circumstances under which price-support activity may occur. For issuers, arrangers, and underwriting banks, the exemption provides legal certainty that stabilising activity—when structured within the statutory boundaries—will not trigger the prohibitions or restrictions contained in Sections 197 and 198 of the Securities and Futures Act.
From an enforcement and risk perspective, the exemption is also a reminder that stabilisation is not a blanket permission. The legal protection depends on strict compliance with the defined scope: the Notes must be the specified Nan Ya Plastics guaranteed notes; the stabiliser must be one of the defined entities (or related corporations); the stabilising action must occur within 30 days from issue; and the trades must involve qualifying counterparties or meet the minimum consideration threshold.
For practitioners advising on documentation and compliance, the Regulations suggest several practical steps: confirm the issuance date to calculate the 30-day window; confirm the identity and guarantee structure of the Notes; confirm the stabiliser’s corporate status and whether it falls within the “related corporations” concept; and ensure that trade confirmations and internal records classify counterparties correctly (institutional investor, relevant person, or principal acquirer with consideration of at least $200,000 per transaction). Where these elements are not evidenced, the exemption may be unavailable, exposing the stabilising activity to the general market conduct rules.
Related Legislation
- Securities and Futures Act (Cap. 289): In particular, Sections 197 and 198 (market conduct provisions from which the exemption is carved out) and Section 337(1) (the enabling provision). Also relevant are Section 239(1) (definition of “securities”) and Section 275(2) (definition of “relevant person”).
- Futures Act (referenced in the platform metadata as related legislation).
- Stabilising Act (referenced in the platform 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. 45) Regulations 2005 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the official text for authoritative provisions.