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
- Legislation Type: Subsidiary legislation (SL)
- Authorising Act: Securities and Futures Act (SFA) (specifically, section 337(1))
- Commencement: 8 December 2005
- Enacting Authority: Monetary Authority of Singapore (MAS)
- Key Provisions: Section 2 (definitions); Section 3 (exemption)
- Regulatory Focus: Exemption from market conduct restrictions for “stabilising action” in relation to specified notes
- Specified Instrument: 5-year fixed rate guaranteed secured notes due December 2010 issued by Adaro Finance B.V., guaranteed by PT Adaro Indonesia and PT Indonesia Bulk Terminal
- Specified Stabiliser: 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 is a targeted regulatory instrument. In plain language, it creates a limited exemption from certain market conduct rules in the Securities and Futures Act (SFA) for stabilising activities carried out in connection with a particular issuance of notes.
Market stabilisation is a practice commonly associated with new issues of securities. The basic idea is that, during the initial period after issuance, certain market participants may buy (or offer to buy) the relevant securities to help stabilise or maintain their market price. This can reduce volatility and support orderly trading. However, stabilisation can also raise concerns about market manipulation or improper influence on prices. Accordingly, the SFA contains provisions that restrict or regulate such conduct.
This set of Regulations does not broadly legalise stabilisation. Instead, it carves out a narrow exemption for stabilising action taken in respect of the specified “Notes” (as defined) within a defined time window (30 days from the date of issue), and only when the stabilising counterparties fall within specified categories (institutional investors, certain “relevant persons”, or principal acquirers meeting a minimum consideration threshold).
What Are the Key Provisions?
Section 1 (Citation and commencement) provides the formal title and states that the Regulations come into operation on 8 December 2005. This matters for practitioners because the exemption is only available for stabilising action taken after the Regulations are in force (and, in any event, within the 30-day period specified in Section 3).
Section 2 (Definitions) is central because the exemption is highly dependent on the precise meaning of terms. The Regulations define:
- “Notes”: 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.
- “securities”: adopts the definition in section 239(1) of the SFA, ensuring that the exemption operates within the SFA’s securities framework.
- “stabilising action”: 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.
From a legal compliance perspective, these definitions mean that the exemption is instrument-specific and actor-specific. If the stabilising activity relates to different notes, or is carried out by a different entity (not Goldman Sachs (Singapore) Pte or its related corporations), the exemption may not apply. Similarly, if the purpose is not to stabilise or maintain market price, the conduct may fall outside the definition of “stabilising action”.
Section 3 (Exemption) is the operative provision. It states that Sections 197 and 198 of the SFA shall not apply to stabilising action taken in respect of the Notes within 30 days from the date of issue, provided the stabilising action is taken with one of the following counterparties:
- (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, where 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.
Practitioners should note the structure of the exemption: it is not merely time-limited; it is also counterparty-limited. Even within the 30-day window, stabilising action may be exempt only to the extent it is undertaken with the specified categories of persons. This is a key compliance point for dealing desks and legal teams: documentation and trade records should clearly show the counterparty category and the consideration threshold (where relevant).
Another important feature is the exemption’s reference to Sections 197 and 198 of the SFA. While the text provided does not reproduce those sections, the Regulations’ purpose indicates that those provisions are the market conduct restrictions that would otherwise apply to stabilising behaviour. By expressly excluding those sections, the Regulations create a legal safe harbour for the defined stabilising action, subject to the conditions.
How Is This Legislation Structured?
The Regulations are concise and consist of three main provisions:
- Section 1: Citation and commencement (8 December 2005).
- Section 2: Definitions of “Notes”, “securities”, and “stabilising action”. The definitions are the backbone of the exemption because they determine what conduct and which instruments are covered.
- Section 3: The exemption itself, specifying that Sections 197 and 198 of the SFA do not apply to stabilising action in respect of the Notes within 30 days from issue, subject to the counterparty categories and the minimum consideration threshold for principal acquirers.
There are no additional parts or schedules in the extract. The Regulations are therefore best understood as a targeted carve-out rather than a comprehensive market conduct regime.
Who Does This Legislation Apply To?
In practical terms, the Regulations apply to persons involved in stabilising action relating to the defined Notes. The definition of “stabilising action” limits the relevant actor to Goldman Sachs (Singapore) Pte and its related corporations. Accordingly, the exemption is primarily relevant to that group’s trading and issuance-related activities.
However, the exemption also depends on the counterparty to the stabilising transactions. Therefore, the Regulations indirectly affect other market participants who may transact with the stabiliser during the 30-day post-issuance period—particularly institutional investors, “relevant persons” under the SFA, and principal acquirers meeting the $200,000 minimum consideration threshold per transaction.
Why Is This Legislation Important?
This Regulations is important because it demonstrates how Singapore manages the tension between orderly market functioning and anti-manipulation objectives. Stabilisation can be beneficial, but it must be carefully bounded. By creating a conditional exemption, MAS allows stabilising activity in a controlled context while maintaining the general applicability of the SFA’s market conduct rules outside that context.
For practitioners, the key value is the availability of a legal safe harbour—but only if the conditions are met. The exemption is narrow: it is limited to a specific issuance of notes, a specific stabiliser (Goldman Sachs (Singapore) Pte and related corporations), a specific time window (30 days from issue), and specific counterparty categories (institutional investors, relevant persons, or principal acquirers with at least $200,000 consideration per transaction). Failure to satisfy any of these elements could mean that Sections 197 and 198 of the SFA continue to apply, exposing the conduct to regulatory and enforcement risk.
From a compliance and litigation-readiness perspective, the Regulations also highlight the importance of trade-level evidence. Legal teams should ensure that internal policies, dealing records, and confirmations can substantiate: (i) the identity of the notes; (ii) the stabilising purpose; (iii) the timing relative to the date of issue; (iv) the identity of the stabiliser; and (v) the counterparty category and consideration threshold where applicable.
Related Legislation
- Securities and Futures Act (SFA) (Cap. 289) — in particular, Sections 197 and 198 (market conduct provisions referenced by the exemption), and Section 337(1) (authorising power), as well as Section 239(1) (definition of “securities”) and Section 275(2) (definition of “relevant person”).
- Futures Act (as referenced in the provided metadata context).
- Stabilising Act (as referenced in the provided metadata context).
- Timeline (as referenced in the provided metadata context, relevant for confirming the correct version and commencement 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.