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 power: Section 337(1) of the Securities and Futures Act
- Commencement: 23 December 2004
- Legislative status: Current version as at 27 March 2026 (per the legislation record)
- Key provisions: Section 2 (definitions); Section 3 (exemption)
- Regulation number: 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 (“Stabilising Action Exemption Regulations”) creates a targeted regulatory exemption from certain market conduct rules under the Securities and Futures Act (the “SFA”). In plain language, the Regulations permit stabilising activity in relation to a specific issuance of notes, without triggering the prohibitions that would otherwise apply.
Stabilisation is a common feature of capital markets transactions. When new debt securities are issued, market makers or arrangers may take steps to support the trading price in the early period after issuance. This can reduce volatility and help ensure orderly trading. However, stabilisation can also resemble conduct that market conduct rules seek to prevent—such as manipulative or misleading trading practices. Accordingly, regulators typically allow stabilisation only within tightly defined parameters.
These Regulations are narrow and transaction-specific. They do not create a general stabilisation regime for all securities. Instead, they define “Notes” as a particular 7-year fixed rate senior notes issuance by Asia Aluminum Holdings Limited, and define “stabilising action” as stabilisation activity carried out by Morgan Stanley & Co. International Limited (and its related corporations). The exemption is time-limited and applies only to stabilising actions taken within 30 days from the date of issue, and only in relation to certain categories of counterparties (persons under section 274 of the SFA or “sophisticated investors” under section 275(2) of the SFA).
What Are the Key Provisions?
1. Citation and commencement (Regulation 1)
Regulation 1 provides the short title and states that the Regulations come into operation on 23 December 2004. For practitioners, this matters because the exemption is only available for stabilising actions taken within the relevant timeframe after the notes’ issue date (which, in practice, will align with the commencement and issuance schedule for the transaction).
2. Definitions (Regulation 2)
Regulation 2 is central because it tightly circumscribes the scope of the exemption.
“Notes” are defined as 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.” This definition is highly specific: it identifies the issuer, the tenor, the maturity, the coupon type (fixed rate), and the maximum principal amount. As a result, stabilisation activity in respect of other notes—different issuer, different maturity, different principal amount, or different terms—would not fall within the exemption.
“Stabilising action” is defined 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. This definition is also restrictive in two ways:
- It limits the stabilising actor to Morgan Stanley & Co. International Limited and its related corporations.
- It limits the permitted conduct to buying (or offering/agreeing to buy) the Notes for the purpose of stabilising or maintaining market price.
3. The exemption from sections 197 and 198 of the SFA (Regulation 3)
Regulation 3 provides the operative relief. 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, with respect to:
- (a) a person referred to in section 274 of the SFA; or
- (b) a “sophisticated investor” as defined in section 275(2) of the SFA.
Although the extract does not reproduce sections 197 and 198, the structure indicates that those provisions impose market conduct restrictions that could otherwise capture stabilising purchases. The exemption effectively “carves out” stabilising activity from those prohibitions, but only when all conditions are satisfied:
- Subject matter: stabilising action must be “in respect of” the defined Notes.
- Actor: the stabilising action must fall within the defined meaning of “stabilising action” (i.e., taken by Morgan Stanley & Co. International Limited or related corporations).
- Time limit: it must be taken “within 30 days from the date of issue of the Notes.” This is a hard temporal boundary.
- Counterparty category: the stabilising action must be with a person under section 274 of the SFA or with a sophisticated investor under section 275(2) of the SFA.
Practical compliance point: Because the exemption is conditional, counsel should ensure that documentation and trading records reflect (i) the identity of the stabilising entity, (ii) the specific notes being stabilised, (iii) the timing of the trades relative to the issue date, and (iv) the status of counterparties as persons within section 274 or sophisticated investors under section 275(2). If any element is missing, the exemption may not apply and the underlying prohibitions in sections 197 and 198 could become relevant.
4. Making and signature
The Regulations are “Made” on 22 December 2004 by the Managing Director of the Monetary Authority of Singapore (“MAS”), KOH YONG GUAN. For practitioners, this confirms the instrument is an MAS-made subsidiary regulation under the SFA’s enabling power.
How Is This Legislation Structured?
Despite being a subsidiary instrument, the Regulations are structured in a straightforward way, with only three substantive provisions:
- Regulation 1 (Citation and commencement): sets the short title and commencement date.
- Regulation 2 (Definitions): defines “Notes” and “stabilising action,” which are the two critical scope-limiting terms.
- Regulation 3 (Exemption): provides the exemption from specified SFA provisions (sections 197 and 198) for stabilising action meeting the defined conditions (notes, actor, time window, and counterparty category).
There are no additional parts or schedules in the extract, reflecting the Regulations’ purpose as a targeted exemption for a particular transaction rather than a comprehensive market conduct framework.
Who Does This Legislation Apply To?
The Regulations apply to stabilising action in relation to the defined Notes, but only when carried out by the defined stabilising actor (Morgan Stanley & Co. International Limited or its related corporations) and within the specified time window. In practice, the primary compliance audience is the arranger, dealer, or market participant conducting stabilisation trades.
Additionally, the exemption is conditioned on the counterparty category. Stabilising action must be undertaken with either (i) a person referred to in section 274 of the SFA or (ii) a sophisticated investor as defined in section 275(2) of the SFA. This means that even if stabilisation is conducted by the permitted entity and within 30 days, the exemption may not cover trades with other types of investors or counterparties outside those categories.
Why Is This Legislation Important?
This Regulations is important because it demonstrates how Singapore’s market conduct regime balances investor protection with the practical needs of securities issuance. Stabilisation can be beneficial for market functioning, but it can also raise concerns about manipulation or artificial price support. By granting a narrow exemption, MAS allows stabilisation while still keeping the general market conduct prohibitions in place for conduct that falls outside the defined safe harbour.
For practitioners, the key significance lies in the precision of the exemption. The Regulations are not a general permission to stabilise; they are a transaction-specific carve-out. Lawyers advising on capital markets transactions should therefore treat such exemptions as highly fact-dependent. A stabilisation programme that differs in any material respect—different notes, different stabilising entity, trades outside the 30-day window, or counterparties not within the relevant investor categories—may not qualify for the exemption.
From an enforcement and risk perspective, the exemption reduces regulatory exposure for qualifying stabilisation activity by removing the applicability of sections 197 and 198. However, it does not necessarily immunise all conduct. Even within the exemption, market participants should still ensure that stabilisation is conducted in a manner consistent with the purpose of maintaining orderly trading and that records are maintained to demonstrate compliance with the exemption’s conditions.
Related Legislation
- Securities and Futures Act (Cap. 289) — particularly sections 197, 198, 274, 275(2), and the enabling power in section 337(1)
- Futures Act (as referenced in the legislation metadata)
- Stabilising Act (as referenced in the legislation metadata)
- Timeline (legislation timeline reference for version control)
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.