Statute Details
- Title: Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Notes) (No. 5) Regulations 2006
- Act Code: SFA2001-S66-2006
- Type: Subsidiary Legislation (SL)
- Authorising Act: Securities and Futures Act (SFA) (Cap. 289), section 337(1)
- Commencement: 1 February 2006
- Enacting instrument: Made on 27 January 2006 by the Monetary Authority of Singapore (MAS)
- Key provisions: Section 2 (definitions); Section 3 (exemption); Schedule (relevant subsidiaries)
- Regulatory focus: Exemption from market conduct prohibitions for “stabilising action” in relation to specified notes
- Specified notes: US$ 5-year floating rate senior notes due February 2011 issued by C&M Finance Ltd., up to US$700 million, guaranteed by C&M Co., Ltd. and relevant subsidiaries
What Is This Legislation About?
The Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Notes) (No. 5) Regulations 2006 (“Stabilising Action (Notes) Regulations”) creates a targeted regulatory exemption within Singapore’s market conduct framework. In broad terms, Singapore’s Securities and Futures Act (SFA) contains prohibitions designed to prevent market manipulation and to promote fair dealing in securities. However, certain market practices—particularly those used to stabilise the price of newly issued securities—may be permitted if they meet defined conditions.
This instrument addresses stabilising activity in respect of a specific issuance: US$ 5-year floating rate senior notes due February 2011 issued by C&M Finance Ltd. The Regulations recognise that stabilisation is often carried out by market professionals during the initial trading period after issuance, and that such activity may be consistent with market functioning rather than manipulation—provided it is limited in time and confined to specified participants.
Practically, the Regulations operate as a narrow carve-out from two SFA provisions (sections 197 and 198) that would otherwise restrict certain conduct. The exemption is time-bound (within 30 days from the date of issue) and participant-specific (institutional investors, certain “relevant persons”, and principal acquirers meeting a minimum consideration threshold). It also defines stabilising action in a way that ties it to Citigroup Global Markets Inc. and its related corporations.
What Are the Key Provisions?
1. Definitions (Section 2)
The Regulations’ operative scope is driven by its definitions. “Notes” is not generic; it is precisely identified as the US$ 5-year floating rate senior notes due February 2011 issued by C&M Finance Ltd. for up to US$700 million, guaranteed by C&M Co., Ltd. and its relevant subsidiaries. This precision matters: the exemption is available only for stabilising action in respect of these particular notes.
“Stabilising action” is defined as an action taken in Singapore or elsewhere by Citigroup Global Markets Inc. (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. This definition is important for two reasons. First, it limits the exemption to stabilisation activity carried out by the specified stabilising entity (Citigroup Global Markets Inc. and related corporations). Second, it frames stabilisation as price-maintenance through buying or offers to buy, rather than other forms of market conduct.
“Relevant subsidiaries” refers to entities listed in the Schedule. While the extract provided does not reproduce the Schedule contents, the legal effect is clear: the guarantee structure and the scope of “Notes” depend on which subsidiaries are included. For practitioners, confirming the Schedule list is essential when assessing whether a particular instrument falls within the exemption.
2. The exemption from SFA sections 197 and 198 (Section 3)
Section 3 is the core operative provision. 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 undertaken by persons falling within one of three categories.
The categories are:
- (a) an institutional investor;
- (b) a relevant person as defined in section 275(2) of the SFA; or
- (c) a person who acquires the Notes as principal, provided the consideration for each transaction is not less than $200,000 (or its equivalent in a foreign currency), whether paid in cash or by exchange of securities or other assets.
In plain language, the Regulations permit stabilising purchases (as defined) for the specified notes during the first 30 days after issuance, but only when the stabilising activity is carried out in circumstances involving the specified types of counterparties/participants. The $200,000 threshold for principal acquirers is a clear economic qualifier intended to ensure that the exemption is not used for small-scale or retail-like participation.
3. Time limitation and practical compliance
The 30-day window is a critical compliance feature. Even if the stabilising action is performed by the correct stabiliser (Citigroup Global Markets Inc. and related corporations) and involves the correct notes, the exemption does not extend beyond the specified period. For legal and compliance teams, this means transaction monitoring must include: (i) the trade date relative to the “date of issue” of the Notes; (ii) whether the activity is truly “stabilising action” (buying or offers to buy to maintain price); and (iii) whether the counterparty/participant fits one of the three categories in section 3.
4. Geographic scope
The definition of stabilising action includes actions taken “in Singapore or elsewhere” and stabilisation of the market price “in Singapore or elsewhere.” This suggests that the exemption is not confined to trades executed solely within Singapore. However, the exemption is still anchored to the stabiliser (Citigroup Global Markets Inc. and related corporations) and to the Notes. Practitioners should still consider Singapore’s broader market conduct enforcement approach and ensure that documentation and disclosures align with Singapore regulatory expectations, even where trades occur offshore.
How Is This Legislation Structured?
The Regulations are structured in a straightforward manner typical of targeted MAS exemptions:
Section 1 provides the citation and commencement date (1 February 2006).
Section 2 sets out definitions that determine the scope of “Notes,” “relevant subsidiaries,” “securities,” and “stabilising action.”
Section 3 contains the operative exemption: it carves out stabilising action from the application of SFA sections 197 and 198, subject to the 30-day limit and the participant categories.
The Schedule identifies “relevant subsidiaries,” which feed into the definition of the Notes (as the Notes are guaranteed by C&M Co., Ltd. and its relevant subsidiaries).
Who Does This Legislation Apply To?
The exemption is relevant primarily to parties involved in stabilising activity for the specified Notes—particularly the stabilising entity and its related corporations, and the counterparties/participants who fall within the categories in section 3. While the Regulations do not list “Citigroup” as a category in section 3, the definition of “stabilising action” already limits the conduct to actions taken by Citigroup Global Markets Inc. or its related corporations. Therefore, the practical beneficiaries are those entities within that corporate group that conduct stabilisation, and the investors/participants that transact within the exemption’s conditions.
Section 3 then narrows the exemption further by requiring that stabilising action be taken within 30 days from issue and be connected to one of three participant types: an institutional investor; a “relevant person” under section 275(2) of the SFA; or a principal acquirer meeting the $200,000 minimum consideration threshold per transaction. Accordingly, lawyers advising issuers, arrangers, dealers, or investors should assess not only the nature of the stabilisation activity but also the legal status and transaction economics of the counterparties involved.
Why Is This Legislation Important?
This Regulations is important because it demonstrates how Singapore’s market conduct regime balances two competing objectives: preventing manipulation and allowing legitimate market practices that support orderly trading after issuance. Stabilisation can reduce volatility and help establish an initial market price for newly issued notes. Without a tailored exemption, stabilising purchases could be caught by prohibitions intended for manipulative conduct.
For practitioners, the key value of this instrument lies in its precision and conditions. It is not a general stabilisation permission for all securities; it is limited to a specific note issuance and a specific stabiliser. It also imposes a strict temporal boundary (30 days from issue) and participant constraints (institutional investors, relevant persons, or principal acquirers with a minimum consideration threshold). These features make it a compliance-sensitive document: small factual differences—wrong instrument, wrong stabiliser, trades outside the 30-day window, or counterparties outside the defined categories—could remove the benefit of the exemption.
From an enforcement perspective, the exemption functions as a safe harbour-like carve-out. While it does not necessarily immunise all conduct (because it only excludes the application of specified SFA provisions to stabilising action meeting the conditions), it provides a structured basis for dealers and investors to conduct stabilisation lawfully. Lawyers should therefore treat it as part of a broader market conduct compliance toolkit, including transaction recordkeeping, internal approvals, and legal review of whether each stabilising trade fits the statutory definition and exemption conditions.
Related Legislation
- Securities and Futures Act (Cap. 289) — in particular sections 197, 198, 275(2), 239(1), and the regulation-making power in section 337(1)
- Futures Act (as referenced in the legislation metadata context)
- Stabilising Act (as referenced in the legislation metadata context)
- Legislation Timeline (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. 5) Regulations 2006 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the official text for authoritative provisions.