Statute Details
- Title: Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Notes) (No. 56) Regulations 2005
- Act Code: SFA2001-S789-2005
- Type: Subsidiary Legislation (SL)
- Authorising Act: Securities and Futures Act (Cap. 289)
- Enacting Power: Section 337(1) of the Securities and Futures Act
- Commencement: 8 December 2005
- Legislative Instrument No.: SL 789/2005
- Key Provisions: Section 2 (definitions); Section 3 (exemption)
- Relevant Market Conduct Provisions Exempted: Sections 197 and 198 of the Securities and Futures Act
- Notes Covered: “5-year fixed rate guaranteed secured notes due December 2010” issued by Adaro Finance B.V., up to US$500 million, guaranteed by PT Adaro Indonesia and PT Indonesia Bulk Terminal
- Stabilising Actor (defined): Goldman Sachs (Singapore) Pte and related corporations
What Is This Legislation About?
The Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Notes) (No. 56) Regulations 2005 (“Stabilising Action Exemption Regulations”) creates a targeted regulatory exemption from certain market conduct rules in the Securities and Futures Act (the “SFA”) for a specific type of transaction: stabilising purchases or offers to buy in relation to a particular bond issuance.
In plain language, the SFA contains provisions designed to protect market integrity by restricting conduct that could mislead investors or artificially influence prices. However, in some capital markets transactions—particularly new issues—market participants may undertake “stabilising action” to help maintain orderly trading conditions immediately after issuance. Stabilisation is not intended to deceive investors; rather, it is meant to reduce volatility and support price discovery during the initial trading period.
This subsidiary legislation recognises that stabilising activity can be legitimate and, therefore, carves out a narrow exemption. It does so by exempting stabilising action taken in respect of the defined “Notes” during a limited time window (30 days from the date of issue), but only when the stabilising counterparties fall within specified categories (institutional investors, certain “relevant persons”, or principal purchasers meeting a minimum consideration threshold).
What Are the Key Provisions?
Section 1: Citation and commencement provides the legal name of the Regulations and states that they come into operation on 8 December 2005. For practitioners, this matters because the exemption is only available for stabilising action occurring after commencement and within the time limits set out in the exemption provision.
Section 2: Definitions is crucial because the exemption is highly specific. The Regulations define “Notes” as the 5-year fixed rate guaranteed secured notes due December 2010 issued by Adaro Finance B.V. for up to US$500 million, unconditionally and irrevocably guaranteed by PT Adaro Indonesia and PT Indonesia Bulk Terminal. This means the exemption is not a general stabilisation regime for all bonds; it is tied to a particular issuance and its specified characteristics.
The definition of “stabilising action” is equally narrow. It refers to an action taken in Singapore or elsewhere by Goldman Sachs (Singapore) Pte 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 limits who can rely on the exemption and what conduct qualifies: stabilisation must be undertaken by the specified entity group and must be directed at price stabilisation/maintenance.
Section 3: Exemption is the operative provision. It states that Sections 197 and 198 of the SFA shall not apply to any stabilising action taken in respect of the Notes within 30 days from the date of issue, provided the stabilising action is carried out with one of the following categories of counterparties:
(a) an institutional investor;
This category allows stabilising trades with institutional investors, which are typically sophisticated market participants. The exemption does not define “institutional investor” in the extract, but it would be understood by reference to the SFA’s definitions and regulatory framework.
(b) a relevant person as defined in section 275(2) of the Act;
This ties the exemption to a defined class of persons under the SFA. “Relevant person” is a technical term in Singapore market conduct law, often used to capture persons who, due to their role or regulatory status, are treated differently for certain conduct rules. For compliance, counsel should verify the precise statutory definition in section 275(2) and confirm whether the counterparty qualifies.
(c) a person who acquires the Notes as principal, where the consideration 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.
This is a minimum consideration threshold designed to ensure that the exemption is not used for small-lot or retail-type participation. The threshold is per transaction, and it expressly includes non-cash consideration (e.g., exchange of securities or other assets). Practitioners should therefore document the consideration structure and ensure it meets the threshold in the relevant currency.
In effect, Section 3 creates a time-limited and counterparty-limited safe space for stabilising activity in relation to the specified Notes. The exemption is not automatic for all stabilising trades; it is conditional on (i) the Notes being the defined issuance, (ii) the stabilising actor falling within the defined stabilising action concept, (iii) the activity occurring within 30 days from issue, and (iv) the counterparty falling within one of the three categories.
How Is This Legislation Structured?
The Regulations are structured as a short instrument with an enacting formula and three substantive provisions:
Section 1 sets out the citation and commencement date.
Section 2 provides definitions that “lock in” the scope of the exemption—particularly the identity of the Notes and the meaning of “stabilising action”.
Section 3 contains the exemption itself, specifying which SFA sections are disapplied (Sections 197 and 198), the time window (30 days from issue), and the permitted counterparty categories.
There are no additional parts or complex schedules in the extract; the legislative design is minimalist and targeted, reflecting the fact that this is an issuance-specific exemption rather than a broad regulatory framework.
Who Does This Legislation Apply To?
Although the Regulations are made under the SFA and disapply specified statutory provisions, their practical application is narrow. The exemption is relevant primarily to the stabilising actor(s) and their counterparties in the context of the defined Notes issuance. The definition of “stabilising action” specifically points to Goldman Sachs (Singapore) Pte and its related corporations. Therefore, stabilising activity by other market participants would not fall within the defined “stabilising action” as written, unless a separate exemption or different legal basis applies.
Counterparties also matter. Section 3 restricts the exemption to stabilising actions conducted with institutional investors, relevant persons under section 275(2) of the SFA, or principal acquirers meeting the $200,000 per transaction consideration threshold. Accordingly, compliance teams should assess the counterparty’s status and the transaction economics before relying on the exemption.
Why Is This Legislation Important?
This Regulations is important because it illustrates how Singapore’s market conduct regime balances two competing objectives: (1) preventing manipulative or misleading conduct that could undermine market integrity, and (2) allowing legitimate stabilisation practices that support orderly trading in the immediate post-issuance period.
For practitioners, the key value lies in the precision of the exemption. It is not a general permission to stabilise; it is an issuance-specific, actor-specific, time-limited, and counterparty-limited carve-out. This means that legal advice must be fact-intensive: counsel should confirm the exact bond terms and identification, the stabilising entity group, the trade dates relative to the “date of issue”, and the counterparty classification or consideration threshold.
From an enforcement perspective, the disapplication of Sections 197 and 198 of the SFA suggests that those provisions would otherwise constrain stabilising purchases or offers to buy. By granting an exemption, the Regulations reduce legal risk for stabilisation activities that meet the conditions. However, if any condition is not satisfied—such as trading outside the 30-day window, dealing with an ineligible counterparty, or failing to meet the minimum consideration threshold—then the exemption would not protect the conduct, and the underlying SFA market conduct rules could apply.
Related Legislation
- Securities and Futures Act (Cap. 289) — in particular:
- Section 337(1) (power to make these Regulations)
- Sections 197 and 198 (market conduct provisions disapplied by the exemption)
- Section 239(1) (definition of “securities”)
- Section 275(2) (definition of “relevant person”)
- Futures Act (referenced in the provided metadata as related legislation)
- Stabilising Act (referenced in the provided metadata as related legislation)
- Timeline / Legislation timeline (for version control and confirmation of the applicable instrument date)
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. 56) Regulations 2005 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the official text for authoritative provisions.