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 (Cap. 289)
- Enacting Authority: Monetary Authority of Singapore (MAS)
- Regulation Number / Citation: SL 728/2005
- Commencement: 22 November 2005
- 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 Securities and Futures Act for specified stabilising action
- Legislative Status (as provided): Current version as at 27 March 2026
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 set of subsidiary regulations made under the Securities and Futures Act (SFA). In plain language, it creates a narrow exemption that allows certain market participants to take “stabilising action” in relation to a specific bond issuance—without being caught by the general market conduct prohibitions in the SFA.
Market conduct rules in the SFA are designed to protect investors and market integrity by restricting conduct that could artificially influence prices or mislead the market. However, in certain capital markets transactions—particularly during the initial distribution of securities—stabilisation practices may be permitted under controlled conditions. This legislation is one such permission: it carves out stabilising activity from the operation of SFA sections that would otherwise apply.
Importantly, the exemption is not general. It is tied to a defined set of “Notes” (a particular 5-year US$ fixed rate note issuance by ICICI Bank Limited, acting through its Singapore branch) and to stabilising action taken by a specified stabilising party (Merrill Lynch (Singapore) Pte. Ltd., or its related corporations). It also limits the exemption to a short window—within 30 days from the date of issue of the Notes—and to particular categories of counterparties or investors.
What Are the Key Provisions?
Section 1 (Citation and commencement) is straightforward. It provides the formal name of the regulations and states that they come into operation on 22 November 2005. For practitioners, this matters because the exemption only becomes available from the commencement date, and the stabilisation period in Section 3 is calculated from the “date of issue of the Notes”.
Section 2 (Definitions) is the heart of the instrument because it precisely defines the scope of what is exempted. Three definitions are particularly important:
- “Notes”: The regulations define the Notes as the 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. This definition is transaction-specific; it prevents the exemption from being used for other issuances.
- “securities”: This adopts the meaning in section 239(1) of the SFA. This is a technical cross-reference ensuring that the SFA’s definitional framework applies consistently.
- “stabilising action”: This is defined as an action taken in Singapore or elsewhere by Merrill Lynch (Singapore) Pte. Ltd. (or 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 is also functional: it focuses on the purpose (stabilisation/maintenance of price) and the permitted mechanics (buying or offering/agreeing to buy).
Section 3 (Exemption) provides the operative legal effect. It states 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, with respect to stabilising action involving certain categories of persons.
In practical terms, Section 3 creates a time-limited and counterparty-limited exemption. The stabilising action must be taken within the 30-day period and must involve one of the following categories:
- (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
For practitioners, the $200,000 threshold in Section 3(c) is a key compliance checkpoint. It is designed to ensure that the exemption does not extend to small retail-type transactions. The threshold applies per transaction and includes non-cash consideration (exchange of securities or other assets), which means documentation should capture the value basis used to determine whether the threshold is met.
Finally, note the structure of the exemption: it is not framed as a general “authorisation” to stabilise. Rather, it is a specific exemption from the application of two SFA provisions. This means that other regulatory requirements—such as disclosure obligations, licensing conditions, or other market conduct rules not expressly exempted—may still apply depending on the facts.
How Is This Legislation Structured?
The regulations are short and comprise:
- Section 1: Citation and commencement (22 November 2005).
- Section 2: Definitions, including the transaction-specific definition of “Notes” and the functional definition of “stabilising action”.
- Section 3: The exemption clause, specifying that SFA sections 197 and 198 do not apply to stabilising action in respect of the defined Notes, within 30 days from issue, and only when the stabilising action is taken with specified categories of counterparties/investors.
Who Does This Legislation Apply To?
Although the regulations are made under the SFA and therefore sit within a broader regulatory framework, the exemption is practically relevant to parties involved in the stabilisation of the defined Notes. The definition of “stabilising action” limits the stabilising activity to actions taken by Merrill Lynch (Singapore) Pte. Ltd. or its related corporations. This means that the exemption is not intended to benefit all market participants—only the specified stabilising entity (and its related corporations) acting in that stabilisation capacity.
Additionally, Section 3 limits the exemption based on the identity and status of the counterparty/investor involved in the stabilising transactions. Stabilising action must be taken with an institutional investor, a relevant person (as defined in the SFA), or a principal acquirer meeting the $200,000 per transaction consideration threshold. Accordingly, even where the stabiliser is the permitted entity, the exemption will not apply if the stabilising trades are structured outside these categories.
Why Is This Legislation Important?
This instrument is important because it clarifies when stabilisation conduct—often necessary to support orderly price formation during issuance—can occur without triggering prohibitions under the SFA. For issuers, arrangers, and trading desks, the exemption reduces legal uncertainty during the critical post-issuance period when market prices may be volatile and when stabilisation strategies are commonly contemplated.
From an enforcement and compliance perspective, the regulations demonstrate MAS’s approach: stabilisation is not prohibited per se, but it is tightly controlled through (i) transaction specificity (the defined Notes), (ii) participant specificity (Merrill Lynch (Singapore) Pte. Ltd. and related corporations), (iii) time limitation (within 30 days from issue), and (iv) counterparty limitation (institutional investors, relevant persons, or principal acquirers meeting a minimum consideration threshold). These constraints are designed to balance market integrity with practical market-making needs.
For practitioners advising on documentation and trade execution, the regulations highlight several practical steps: confirm that the Notes fall within the defined issuance; ensure stabilising trades are executed within the 30-day window; verify the stabiliser’s identity and corporate relationship; and maintain evidence that counterparties fall within the defined categories and, where applicable, that the $200,000 threshold is satisfied on a per-transaction basis (including for non-cash consideration). Failure to meet any of these conditions could mean that the exemption does not apply and the underlying SFA prohibitions may become relevant.
Related Legislation
- Securities and Futures Act (Cap. 289) — in particular:
- Section 197 (market conduct prohibition subject to the exemption)
- Section 198 (market conduct prohibition subject to the exemption)
- Section 275(2) (definition of “relevant person”)
- Section 239(1) (definition of “securities”)
- Section 337(1) (power to make regulations)
- Futures Act (referenced in the provided metadata as related legislation)
- Stabilising Act (referenced in the provided metadata as related legislation)
- Timeline (legislation timeline reference 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. 47) Regulations 2005 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the official text for authoritative provisions.