Statute Details
- Title: Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Notes) (No. 53) Regulations 2004
- Act Code: SFA2001-S767-2004
- Type: Subsidiary Legislation (SL)
- Legislative Status: Current version (as at 27 Mar 2026)
- Commencement: 23 December 2004
- Enacting Authority: Monetary Authority of Singapore (MAS)
- Authorising Act: Securities and Futures Act (SFA) (notably section 337(1))
- Key Provisions: Section 1 (Citation and commencement); Section 2 (Definitions); Section 3 (Exemption)
- Regulatory Focus: Exemption from market conduct restrictions for “stabilising action” in relation to specified notes
- Instrument Identifier: SL 767/2004
What Is This Legislation About?
The Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Notes) (No. 53) Regulations 2004 is a targeted regulatory instrument that creates a narrow exemption from certain market conduct provisions under the Securities and Futures Act (SFA). In plain terms, it allows specified persons to take “stabilising action” in connection with a particular issuance of notes during a defined period after the notes are issued—without being in breach of the SFA’s general prohibitions relating to market conduct.
Stabilisation is a common feature of certain debt offerings. When new securities are issued, market prices can be volatile. Under stabilisation arrangements, a dealer may buy (or offer to buy) the securities to help maintain orderly trading and reduce extreme price fluctuations. However, market conduct rules are designed to prevent manipulation and improper conduct. This set of Regulations reconciles those competing policy goals by carving out a controlled exemption for stabilisation, but only for a specific set of notes and only within a limited timeframe.
Importantly, the exemption is not general. It is tied to a particular instrument: “the 7-year fixed rate senior notes due December 2011” issued by Asia Aluminum Holdings Limited, up to a specified principal amount. It is also tied to a particular stabilising participant: Morgan Stanley & Co. International Limited (and its related corporations). The exemption applies only for stabilising action taken within 30 days from the date of issue of the notes and only if the stabilising action is undertaken by specified categories of persons (including a category referenced in the SFA and “sophisticated investors” as defined in the SFA).
What Are the Key Provisions?
Section 1 (Citation and commencement) provides the formal citation and the date the Regulations come into force. The Regulations may be cited as the “Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Notes) (No. 53) Regulations 2004” and they commenced on 23 December 2004. For practitioners, this matters because the exemption is only relevant to stabilising action taken after the Regulations are in operation (though in practice, stabilisation would typically be contemporaneous with the issuance timeline).
Section 2 (Definitions) is central because it defines the scope of the exemption. Two defined terms do the work:
- “Notes” means the 7-year fixed rate senior notes due December 2011 issued by Asia Aluminum Holdings Limited for a principal amount of up to US$500 million.
- “stabilising action” means an action taken in Singapore or elsewhere by Morgan Stanley & Co. International Limited (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.
From a compliance perspective, these definitions are restrictive. If the instrument is not the specified notes, the exemption does not apply. If the stabilising activity is not undertaken by Morgan Stanley & Co. International Limited or its related corporations, the exemption does not apply. Likewise, the conduct must be directed at stabilising or maintaining market price—rather than, for example, unrelated trading activity.
Section 3 (Exemption) is the operative provision. It states that sections 197 and 198 of the 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 a person falling into one of two categories:
- (a) a person referred to in section 274 of the Act; or
- (b) a sophisticated investor as defined in section 275(2) of the Act.
Practically, this means the exemption is conditional both on time and counterparty. Even if stabilisation is performed by the defined stabiliser and relates to the defined notes, the exemption only protects the stabilising action if it occurs within the 30-day post-issuance window and involves counterparties within the specified SFA categories. A lawyer advising on stabilisation arrangements should therefore map the transaction counterparties and ensure they fall within section 274 persons or the statutory definition of sophisticated investors.
While the extract does not reproduce sections 197 and 198 themselves, the structure indicates that those sections contain prohibitions or restrictions on market conduct that would otherwise apply to dealings in securities. The Regulations effectively carve out stabilisation conduct from those prohibitions, but only to the extent the stabilisation fits the defined parameters.
How Is This Legislation Structured?
This subsidiary legislation is concise and consists of a short set of provisions:
- Part/Section 1: Citation and commencement—sets the legal identity of the Regulations and the date they take effect.
- Part/Section 2: Definitions—defines “Notes” and “stabilising action,” which are the gatekeeping concepts for the exemption.
- Part/Section 3: Exemption—specifies which SFA provisions are disapplied (sections 197 and 198) and under what conditions (30 days from issue; stabilising action in respect of the defined notes; and dealings with persons under section 274 or sophisticated investors under section 275(2)).
There are no additional parts or schedules in the extract, reflecting the Regulations’ purpose as a bespoke exemption for a particular issuance and stabilisation programme.
Who Does This Legislation Apply To?
The Regulations apply to stabilising action in relation to the specified notes. In practice, the primary regulated party is the stabilising participant—defined as Morgan Stanley & Co. International Limited and its related corporations—because “stabilising action” is defined by reference to that entity and its group. However, the exemption’s effect also depends on the identity of the counterparty: the stabilising action must be taken with a person referred to in section 274 of the SFA or with a sophisticated investor as defined in section 275(2).
Accordingly, the exemption is relevant to (i) the dealer arranging or conducting stabilisation, (ii) the issuer and transaction parties coordinating the offering timetable, and (iii) compliance teams ensuring that stabilisation trades are executed within the permitted window and with eligible counterparties. If stabilisation is attempted outside the 30-day period or with ineligible counterparties, the exemption would not apply, and the underlying SFA market conduct provisions would likely become relevant.
Why Is This Legislation Important?
This Regulations is important because it provides legal certainty for stabilisation activities in a specific debt issuance. Without an exemption, stabilisation-related buying or offers to buy could potentially trigger market conduct restrictions under the SFA. By disapplying sections 197 and 198 for qualifying stabilising action, MAS enables a structured and time-limited stabilisation mechanism that supports orderly trading while maintaining the integrity of market conduct rules.
For practitioners, the key value lies in the precision of the exemption. The Regulations are not a blanket permission to stabilise any security. They are an instrument-by-instrument and counterparty-by-counterparty exemption. Lawyers advising on offering documentation, dealer arrangements, and compliance controls should therefore treat the Regulations as a checklist: confirm the exact instrument (the defined notes), confirm the stabiliser (Morgan Stanley & Co. International Limited or related corporations), confirm the timing (within 30 days from issue), and confirm the counterparties (section 274 persons or sophisticated investors under section 275(2)).
From an enforcement and risk perspective, the conditional nature of the exemption means that documentation and trade records are critical. Stabilisation programmes typically involve operational steps (order placement, execution, and reporting) that must be aligned with the legal conditions. If a stabilisation trade is executed with a counterparty that does not meet the statutory categories, or if trades occur after the 30-day period, the exemption may fail, exposing the stabiliser and related parties to potential regulatory scrutiny under the underlying SFA provisions.
Related Legislation
- Securities and Futures Act (SFA) (Cap. 289) — in particular, the market conduct provisions referenced (sections 197 and 198) and the definitions/counterparty categories referenced (sections 274 and 275(2)), as well as the regulation-making power in section 337(1).
- Futures Act — referenced in the legislation metadata timeline context (relevant for broader market conduct framework, though not the operative statute for this specific exemption).
- Stabilising Act — referenced in the metadata; relevant conceptually to stabilisation frameworks (the operative exemption here is under the SFA).
- Timeline / Legislation timeline — for confirming the correct version and effective date of the Regulations.
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. 53) Regulations 2004 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the official text for authoritative provisions.