Statute Details
- Title: Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Notes) (No. 47) Regulations 2005
- Act Code: SFA2001-S728-2005
- Type: Subsidiary Legislation (SL)
- Authorising Act: Securities and Futures Act (SFA) (Cap. 289), specifically section 337(1)
- Commencement: 22 November 2005
- Legislative Status: Current version as at 27 March 2026 (per the provided extract)
- SL Number: SL 728/2005
- Key Provisions: Section 2 (definitions); Section 3 (exemption)
- Relevant SFA Provisions Exempted: 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. 47) Regulations 2005 (“Stabilising Action Exemption Regulations”) is a targeted regulatory instrument that carves out a specific exemption from certain market conduct restrictions in the Securities and Futures Act (SFA). In plain language, it allows stabilising activity—conducted for the purpose of supporting or maintaining the market price of a particular set of securities—to occur without triggering the prohibitions that would otherwise apply.
Stabilisation is a common feature of certain capital markets transactions. When notes or other debt instruments are newly issued, market liquidity and price discovery may be thin. Market participants may therefore undertake limited buying or offers to buy to reduce volatility and support orderly trading. However, stabilising conduct can overlap with rules against market manipulation or improper trading practices. These Regulations address that tension by granting a narrow exemption for stabilising action in respect of a defined issuance of notes.
Importantly, the exemption is not general. It is tied to (i) a specific issuer and instrument (the “Notes” as defined), (ii) a specific stabiliser (Merrill Lynch (Singapore) Pte. Ltd. and related corporations), and (iii) a defined time window (within 30 days from the date of issue). It also limits the categories of counterparties and sets a minimum consideration threshold for certain acquisitions.
What Are the Key Provisions?
Section 1 (Citation and commencement) provides the formal name of the Regulations and states that they come into operation on 22 November 2005. For practitioners, this matters when assessing whether stabilising conduct occurred within the regulatory framework applicable at the relevant time.
Section 2 (Definitions) is central because the exemption is only as broad as its defined terms. The Regulations define three key concepts:
- “Notes”: The Regulations specify the exact instrument—5-year US$ fixed rate notes due November 2010 issued by ICICI Bank Limited, acting through its Singapore Branch, for a principal amount of up to US$550 million.
- “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 an action taken in Singapore or elsewhere by Merrill Lynch (Singapore) Pte. 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.
The definition of “stabilising action” is particularly important for compliance. It restricts the exemption to stabilising conduct carried out by the named stabiliser (and its related corporations). It also covers not only actual purchases but also offers or agreements to buy—meaning that compliance teams must consider communications and contractual commitments, not merely executed trades.
Section 3 (Exemption) is the operative provision. It states that sections 197 and 198 of the Act shall not apply to any 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 certain categories of persons.
In practical terms, the exemption functions as a “safe harbour” (though drafted as a statutory disapplication) for stabilising actions that fall within the defined scope. The disapplication means that the prohibitions in sections 197 and 198—whatever their precise content—are not triggered for qualifying stabilising conduct.
Section 3 then sets out three categories of counterparties/participants:
- (a) an institutional investor;
- (b) a relevant person as defined in section 275(2) of the Act; or
- (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.
For practitioners, the counterparty limitations are often where compliance risk concentrates. The exemption is not simply “any stabilising trades.” It is stabilising action undertaken within the 30-day period and transacted with qualifying counterparties. In particular:
- The threshold in paragraph (c) requires careful transaction-by-transaction assessment. If the consideration is below the minimum, the exemption would not apply for that acquisition.
- The phrase “acquires the Notes as principal” indicates that the relevant person must be acting on its own account rather than as an agent. This distinction can matter in trade booking and documentation.
- The inclusion of “exchange of securities or other assets” means the minimum consideration test is not limited to cash pricing; valuation of exchanged assets becomes relevant.
Finally, the temporal limitation—within 30 days from the date of issue—requires precise determination of the “date of issue” for the Notes and monitoring of stabilising activity against that deadline. If stabilising action occurs outside the 30-day window, the exemption would not apply, and the underlying SFA prohibitions in sections 197 and 198 could become relevant.
How Is This Legislation Structured?
The Regulations are concise and structured around three provisions:
- Section 1 sets out the citation and commencement.
- Section 2 provides definitions that determine the scope of the exemption, especially the precise identification of the Notes and the definition of stabilising action.
- Section 3 contains the exemption, disapplying sections 197 and 198 of the SFA for qualifying stabilising action within a specified period and with specified categories of persons.
There are no additional parts or complex procedural schedules in the extract provided. The Regulations operate as a targeted carve-out rather than a comprehensive market conduct regime.
Who Does This Legislation Apply To?
Although the exemption is framed as disapplying provisions of the SFA, its practical application is directed at market participants involved in stabilising activity for the defined Notes. The Regulations specifically contemplate stabilising action taken by Merrill Lynch (Singapore) Pte. Ltd. or its related corporations. Therefore, the main compliance audience is the stabilising dealer group and any entities within that corporate structure that may execute or arrange stabilising trades.
Additionally, the exemption’s effect depends on the counterparty to the stabilising action. The Regulations permit stabilising action only when it is taken with an institutional investor, a relevant person (as defined in the SFA), or a principal acquirer meeting the minimum consideration threshold. This means that issuers, dealers, and their counterparties must ensure that trade counterparties and transaction terms fall within the defined categories.
Why Is This Legislation Important?
This legislation is important because it enables orderly market functioning during the early trading period of a specific debt issuance while preserving the integrity of market conduct rules. Without such exemptions, stabilising activity could be treated as potentially prohibited conduct under the SFA’s market conduct provisions. By disapplying sections 197 and 198 for qualifying stabilising action, the Regulations provide legal certainty for transaction participants.
From a practitioner’s perspective, the Regulations highlight three compliance themes:
- Scope discipline: the exemption is limited to a defined set of notes and a defined stabiliser. It is not a blanket permission for any stabilising activity.
- Time discipline: stabilising action must occur within 30 days from the date of issue. Monitoring and audit trails are essential.
- Counterparty and pricing discipline: stabilising trades must be with qualifying persons, and where the counterparty is a principal acquirer, the minimum consideration threshold must be met on a per-transaction basis (including when consideration is satisfied through exchanges of assets).
In enforcement terms, the exemption’s narrow drafting suggests that regulators would expect strict adherence to its conditions. If stabilising action falls outside the defined parameters—wrong notes, wrong stabiliser, wrong time window, or non-qualifying counterparties—the disapplication would not apply, and the underlying SFA prohibitions could be engaged. Accordingly, legal and compliance teams should treat these Regulations as a “checklist” instrument for stabilisation programmes.
Related Legislation
- Securities and Futures Act (Cap. 289) — in particular sections 197, 198, 239(1), 275(2), and the regulation-making power in section 337(1).
- 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. 47) Regulations 2005 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the official text for authoritative provisions.