Statute Details
- Title: Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Notes) (No. 46) Regulations 2005
- Act Code: SFA2001-S716-2005
- Type: Subsidiary Legislation (SL)
- Authorising Act: Securities and Futures Act (Cap. 289), specifically section 337(1)
- Commencement: 15 November 2005
- Enacting authority: Monetary Authority of Singapore (MAS)
- Key provisions: Section 2 (definitions); Section 3 (exemption)
- Regulatory focus: Exemption from market conduct prohibitions for “stabilising action” in relation to specified notes
- Specified instrument: US$ fixed rate notes due November 2012 issued by Korea East-West Power Co., Ltd. (up to US$300 million)
What Is This Legislation About?
The Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Notes) (No. 46) Regulations 2005 (“Stabilising Exemption Regulations”) is a targeted regulatory instrument. In plain terms, it creates a limited exemption from certain market conduct rules in the Securities and Futures Act (the “SFA”) for stabilising activities carried out in connection with a specific bond/notes issuance.
Stabilising action is a practice used in securities markets to help manage short-term price volatility after issuance. Market participants may buy (or offer to buy) securities to support or maintain market price. However, stabilising can overlap with conduct that market conduct legislation seeks to regulate—such as improper trading or misleading price formation. This set of Regulations therefore does not broadly legalise stabilisation; instead, it carves out a narrow exemption for stabilising action in respect of a defined set of “Notes” and within a defined time window.
Practically, the Regulations are designed to allow legitimate market stabilisation in a particular transaction while ensuring that the stabilisation is confined to specified actors, a specified instrument, and a specified period after issuance. This is a common legislative technique: rather than rewriting general prohibitions, the law grants a transaction-specific exemption that enables market practice under controlled conditions.
What Are the Key Provisions?
Section 1 (Citation and commencement) provides the formal title and the date the Regulations came into operation. The Regulations may be cited as the “Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Notes) (No. 46) Regulations 2005” and commenced on 15 November 2005. For practitioners, commencement matters because exemptions from prohibitions only apply if the relevant conduct occurs after the Regulations take effect.
Section 2 (Definitions) is central because the exemption in Section 3 is drafted by reference to defined terms. The Regulations define:
- “Notes”: the US$ fixed rate notes due November 2012 issued by Korea East-West Power Co., Ltd., with a principal amount of up to US$300 million.
- “securities”: this adopts the meaning in section 239(1) of the SFA, ensuring consistency with the Act’s definitional framework.
- “stabilising action”: an action taken in Singapore or elsewhere by specified entities—Barclays Bank PLC, Credit Suisse First Boston (Europe) Limited, Lehman Brothers International (Europe), or any of their related corporations—to buy, or offer/agree to buy, any of the Notes to stabilise or maintain the market price of the Notes in Singapore or elsewhere.
For legal analysis, the definition of “stabilising action” is both actor-specific and purpose-specific. Only the named institutions (and their related corporations) can rely on the exemption, and the conduct must be directed to stabilising or maintaining market price. This reduces the risk that unrelated trading activity could be characterised as stabilisation.
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, subject to the identity and transaction conditions set out in paragraphs (a) to (c).
Although the text provided does not reproduce Sections 197 and 198 of the SFA, the structure indicates that those sections contain prohibitions or restrictions relevant to market conduct. The exemption therefore removes the application of those prohibitions for qualifying stabilising action.
Section 3 limits the exemption to stabilising action undertaken with one of the following counterparties or acquisition circumstances:
- (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, provided that the consideration for the acquisition is not less than $200,000 (or its equivalent in a foreign currency) for each transaction, whether paid in cash or by exchange of securities or other assets.
From a practitioner’s perspective, the most important compliance points in Section 3 are:
- Time window: stabilising action must occur within 30 days from the date of issue. Any stabilisation outside this window would not be covered by the exemption.
- Instrument specificity: the exemption is tied to the defined “Notes” (Korea East-West Power Co., Ltd. US$ fixed rate notes due November 2012).
- Counterparty/transaction conditions: stabilising purchases must be made in the qualifying manner—either with institutional investors, relevant persons, or principal acquirers meeting the $200,000 minimum consideration threshold per transaction.
- Actor limitation: stabilising action must be taken by the named stabilising entities (or their related corporations) as defined in Section 2.
These conditions collectively ensure that the exemption is narrow and transaction-controlled. In practice, counsel advising a stabilisation programme would typically map the trading plan against these statutory filters: who is trading, what instrument is being traded, when the trades occur, and who the counterparties are (or the nature of the acquisition consideration).
How Is This Legislation Structured?
The Regulations are concise and structured around a standard legislative template:
- Section 1 sets out the citation and commencement.
- Section 2 provides definitions that control the scope of the exemption.
- Section 3 contains the exemption, specifying which SFA provisions are disapplied, the time limit, and the qualifying counterparties/transaction conditions.
There are no additional parts or complex schedules in the extract. The Regulations operate as a targeted disapplication instrument: they do not create a general stabilisation regime, but rather exempt a defined stabilisation activity from specified SFA prohibitions.
Who Does This Legislation Apply To?
The exemption is relevant primarily to market participants involved in the issuance and trading of the specified Notes—particularly the stabilising entities identified in the definition of “stabilising action” (Barclays Bank PLC, Credit Suisse First Boston (Europe) Limited, Lehman Brothers International (Europe), and their related corporations). These entities are the ones who can take stabilising action and seek reliance on the exemption.
However, the exemption also depends on the counterparty or acquisition circumstances described in Section 3. Therefore, the Regulations indirectly affect institutional investors, “relevant persons” (as defined in the SFA), and principal acquirers who purchase the Notes with at least $200,000 consideration per transaction (or its foreign currency equivalent). If the stabilising trades do not meet these conditions, the exemption would not apply, and the underlying SFA prohibitions in Sections 197 and 198 would remain relevant.
Why Is This Legislation Important?
This legislation is important because it reconciles two regulatory objectives: (1) allowing orderly market practices such as stabilisation after issuance, and (2) preventing conduct that could undermine market integrity. Without an exemption, stabilising activity might be caught by general market conduct prohibitions, creating legal uncertainty for issuers, underwriters, and trading desks.
For practitioners, the value of the Regulations lies in their precision. The exemption is not open-ended; it is confined to a specific bond issuance, a specific set of stabilising institutions, and a specific post-issuance period. This means compliance advice can be structured around clear statutory checkpoints: confirm the instrument, confirm the stabiliser identity, confirm the timing, and confirm the counterparty/transaction thresholds.
From an enforcement and risk perspective, the narrowness of the exemption also means that reliance must be carefully documented. If stabilising trades occur outside the 30-day window, involve non-qualifying counterparties, or are executed by entities not covered by the definition, the exemption would likely fail. Counsel should therefore ensure that trading records, approvals, and trade confirmations can demonstrate compliance with Section 3’s conditions.
Related Legislation
- Securities and Futures Act (Cap. 289) — particularly Sections 197, 198, 239(1), 275(2), and the authorising power in section 337(1).
- Futures Act (as referenced in the legislation metadata/timeline context).
- Stabilising Act (as referenced in the legislation metadata/timeline context).
- Timeline / Legislation timeline materials (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. 46) Regulations 2005 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the official text for authoritative provisions.