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)
- Authorising Act: Securities and Futures Act (Cap. 289)
- Enacting authority: Monetary Authority of Singapore (MAS)
- Commencement: 23 December 2004
- Legislative instrument: SL 767/2004
- Status: Current version as at 27 March 2026 (per provided extract)
- Key provisions:
- Section 1: Citation and commencement
- Section 2: Definitions (“Notes”, “stabilising action”)
- Section 3: Exemption from Sections 197 and 198 of the Securities and Futures Act for specified stabilising action
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. In plain terms, it creates a narrow exemption from certain market conduct rules in the Securities and Futures Act (the “SFA”) for a specific type of market stabilisation activity carried out in relation to a particular bond issuance.
Market stabilisation is a practice commonly used in securities offerings to support or maintain the trading price of newly issued securities for a limited period. Without an exemption, stabilisation activities can potentially fall within prohibitions or restrictions on market manipulation, false or misleading conduct, or improper dealings. This Regulations package addresses that concern by carving out a lawful pathway for stabilising action, but only where strict conditions are met.
Importantly, the exemption is not general. It is tied to a defined set of “Notes” and a defined stabiliser (Morgan Stanley & Co. International Limited and its related corporations), and it is limited by time (within 30 days from the date of issue). It also limits the persons who may be involved, by reference to categories in the SFA (including “sophisticated investors” as defined in the Act).
What Are the Key Provisions?
Section 1 (Citation and commencement) is straightforward. It provides the short title and states that the Regulations “shall come into operation on 23rd December 2004.” For practitioners, this matters mainly for determining the regulatory framework applicable to stabilisation activities undertaken around the issuance timeline.
Section 2 (Definitions) is the core of the instrument because it precisely identifies (i) the securities covered and (ii) the stabilisation activity contemplated. The Regulations define “Notes” as the “7-year fixed rate senior notes due December 2011” issued by Asia Aluminum Holdings Limited, with a principal amount “up to US$500 million.” This specificity is critical: the exemption is not available for other issuances, other tenors, or other note structures.
The Regulations also define “stabilising action” as 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. Practically, this definition captures both actual purchases and offers/agreements to purchase—meaning that the exemption is designed to cover the full range of stabilisation mechanics that may be used in practice, not only completed trades.
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 of the Notes,” provided the stabilising action is taken with either: (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.”
While the extract does not reproduce Sections 197 and 198 of the SFA, the legal effect is clear: the Regulations remove the risk that stabilising trades would be treated as contraventions of those specific market conduct provisions. The exemption is therefore best understood as a conditional safe harbour.
For a practitioner, the most important compliance questions arising from Section 3 are:
- Timing: stabilising action must occur “within 30 days from the date of issue.” This requires careful documentation of the issue date and the trade dates.
- Scope of securities: the action must relate to the defined “Notes” (Asia Aluminum Holdings Limited 7-year fixed rate senior notes due December 2011, up to US$500 million).
- Identity of stabiliser: the stabilising action must be taken by Morgan Stanley & Co. International Limited or its related corporations (as defined in the Regulations).
- Counterparty category: stabilising action must be taken with a person in the SFA’s Section 274 category or with a “sophisticated investor” under Section 275(2). This means the exemption is not available for all counterparties; it is restricted to particular investor classes.
In practice, counsel should expect that the stabilisation programme, trade confirmations, and counterparty records will be scrutinised to verify that the exemption conditions were satisfied. Even where an exemption exists, market conduct expectations typically remain relevant (for example, the stabilisation must genuinely be for stabilising purposes rather than for unrelated trading strategies).
How Is This Legislation Structured?
This Regulations instrument is structurally concise. It contains:
- Enacting Formula (the legal authority statement): MAS makes the Regulations in exercise of powers conferred by section 337(1) of the SFA.
- Section 1 (Citation and commencement): identifies the instrument and its effective date.
- Section 2 (Definitions): defines “Notes” and “stabilising action,” which are essential to determine the scope of the exemption.
- Section 3 (Exemption): provides the conditional exemption from SFA Sections 197 and 198 for stabilising action within the specified time window and involving specified categories of counterparties.
There are no additional parts or schedules in the extract. The drafting style reflects the instrument’s purpose: it is a targeted exemption rather than a comprehensive regulatory code.
Who Does This Legislation Apply To?
The Regulations apply to stabilising action in respect of the defined “Notes.” Although the exemption is framed as an exemption from the application of SFA Sections 197 and 198, it is effectively directed at the parties who would otherwise perform stabilisation activities—most notably the stabilising entity identified in the definition (“Morgan Stanley & Co. International Limited, or any of its related corporations”).
Additionally, Section 3 imposes a counterparty limitation. Stabilising action must be taken “with” either a person referred to in SFA Section 274 or with a “sophisticated investor” under SFA Section 275(2). Accordingly, the exemption’s practical reach depends not only on who conducts the stabilisation, but also on who the stabiliser trades with. If stabilisation trades are executed with counterparties outside those categories, the exemption would not apply, and the stabilisation trades could be exposed to the underlying prohibitions in Sections 197 and 198.
Why Is This Legislation Important?
This Regulations instrument is important because it demonstrates how Singapore’s market conduct framework accommodates legitimate market practices while maintaining safeguards against manipulation. Stabilisation is often commercially necessary in new issuances to reduce volatility and support orderly trading. However, without a tailored exemption, stabilisation could be mischaracterised as improper dealing.
From an enforcement and compliance perspective, the Regulations provide clarity and predictability. MAS has expressly carved out a defined safe harbour: stabilising action for the specified notes, within a defined period, by a defined stabiliser, and with defined counterparty categories. This reduces uncertainty for issuers, arrangers, and trading desks, and it helps counsel structure stabilisation programmes that can be defended as lawful.
For practitioners advising on bond issuance documentation and trading compliance, the Regulations should be treated as a “conditions checklist” for stabilisation activities. Key practical steps include: verifying the issue date; confirming that the notes fall within the defined description; ensuring that the stabiliser entity executing trades is within the defined group; confirming that counterparties are within the SFA Section 274 category or are “sophisticated investors”; and maintaining evidence that the stabilisation was undertaken for the purpose of stabilising or maintaining market price.
Finally, the Regulations’ narrow scope highlights a broader lesson: exemptions in the SFA regime are often highly specific. Counsel should not assume that stabilisation exemptions for one issuance automatically extend to other issuances or other stabilisers. Each exemption instrument must be read on its own terms.
Related Legislation
- Securities and Futures Act (Cap. 289) — in particular:
- Section 197 (market conduct provision exempted by Section 3 of these Regulations)
- Section 198 (market conduct provision exempted by Section 3 of these Regulations)
- Section 274 (counterparty category referenced in Section 3(a))
- Section 275(2) (definition of “sophisticated investor” referenced in Section 3(b))
- Section 337(1) (power under which MAS makes these Regulations)
- 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. 53) Regulations 2004 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the official text for authoritative provisions.