Statute Details
- Title: Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Notes) (No. 57) Regulations 2005
- Act Code: SFA2001-S790-2005
- Type: Subsidiary Legislation (SL)
- Authorising Act: Securities and Futures Act (Cap. 289)
- Enacting Power: Section 337(1) of the Securities and Futures Act
- Citation: SL 790/2005
- Commencement: 9 December 2005
- Key Provisions: Section 2 (definitions); Section 3 (exemption)
- Regulatory Authority: Monetary Authority of Singapore (MAS)
- Stated Status in Source: Current version as at 27 March 2026
What Is This Legislation About?
The Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Notes) (No. 57) Regulations 2005 (“Stabilising Action Exemption Regulations”) is a targeted regulatory instrument. In plain language, it creates a limited exemption from certain market conduct rules in the Securities and Futures Act (the “SFA”) for stabilising activities carried out in relation to a specific issuance of notes.
Stabilisation is a common market practice in securities offerings. When a new bond or note is issued, market liquidity and price discovery may be thin at the outset. Under certain conditions, an arranger or dealer may buy (or offer to buy) the relevant securities to support orderly trading and reduce extreme price volatility. However, stabilisation can overlap with prohibitions on market manipulation or improper dealing. This legislation resolves that tension by carving out stabilising actions that meet defined criteria.
Importantly, the exemption is not general. It is tied to a particular set of “Notes” (a specific 10-year fixed rate senior notes issuance by Chinese Future Corporation, guaranteed by Chinese Future Limited) and to stabilising actions taken by a specified stabilisation participant (Morgan Stanley & Co. International Limited and its related corporations). The exemption also applies only within a defined time window after issuance and only for specified categories of counterparties/investors.
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 9 December 2005. For practitioners, this matters because the exemption is only available for stabilising actions taken after the Regulations are in force (subject to the time window in Regulation 3).
2. Definitions (Regulation 2)
Regulation 2 is the backbone of the instrument because it precisely defines the scope of the exemption. Three key terms are defined:
- “Notes”: These are defined narrowly as the 10-year fixed rate senior notes due December 2015 issued by Chinese Future Corporation for a principal amount of up to US$400 million, unconditionally and absolutely guaranteed by Chinese Future Limited.
- “securities”: This adopts the meaning in section 239(1) of the SFA, ensuring that the exemption operates within the SFA’s definitional framework.
- “stabilising action”: This 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 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, the definitions mean that the exemption is available only if the stabilisation activity is carried out by the specified stabiliser (Morgan Stanley & Co. International Limited or its related corporations) and is directed at the defined Notes. If a different dealer performs similar activities, or if the instrument is not the specified notes issuance, the exemption would not apply.
3. The exemption from SFA sections 197 and 198 (Regulation 3)
Regulation 3 is the operative provision. It states that sections 197 and 198 of the SFA 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 transactions involving:
- (a) an institutional investor
- (b) a “relevant person” as defined in section 275(2) of the SFA
- (c) a person who acquires the Notes as principal, provided that 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
Practically, this provision does two things:
- Temporal limitation: stabilising action must occur within 30 days from the date of issue. This is a classic stabilisation window—long enough to support initial trading, but short enough to reduce the risk of ongoing price support.
- Counterparty limitation: the exemption applies only when the stabilising transactions are with specified categories of counterparties (institutional investors, relevant persons, or principal acquirers meeting the minimum consideration threshold).
For lawyers advising issuers, arrangers, or dealers, the counterparty categories are crucial. The exemption is not a blanket permission to stabilise with any market participant. Instead, it is designed to ensure that stabilising dealing is confined to sophisticated or high-value counterparties and to persons within the SFA’s regulatory taxonomy.
4. Formal making and signature
The Regulations were made on 28 November 2005 by Heng Swee Keat, Managing Director of MAS. While this is not substantive law, it is relevant for document authenticity and for confirming the instrument’s official status.
How Is This Legislation Structured?
This is a short, targeted subsidiary instrument with a simple structure:
- Regulation 1 (Citation and commencement): establishes the short title and commencement date (9 December 2005).
- Regulation 2 (Definitions): defines “Notes,” “securities,” and “stabilising action,” thereby controlling the scope of the exemption.
- Regulation 3 (Exemption): provides the exemption from SFA sections 197 and 198, subject to (i) a 30-day post-issuance window and (ii) specified counterparty categories and transaction value thresholds.
There are no additional parts or complex schedules in the extract provided. The legislative design is therefore “precision by definition”: the Regulations work by tightly defining the relevant notes and stabiliser, then limiting the exemption through time and counterparty conditions.
Who Does This Legislation Apply To?
The Regulations apply to stabilising actions in respect of the defined Notes taken by Morgan Stanley & Co. International Limited or its related corporations. In practice, this will concern the dealer/arranger and any group entities conducting stabilisation dealing, including their trading desks and compliance functions.
However, the exemption is also conditioned on the type of counterparty involved in the stabilising transactions. Therefore, the Regulations indirectly affect issuers and market participants because they define which counterparties can be engaged in stabilisation dealing without triggering the prohibitions in SFA sections 197 and 198. If stabilisation is attempted with a counterparty outside the listed categories, the exemption would not protect the dealing activity.
Why Is This Legislation Important?
This instrument is important because it clarifies when stabilisation dealing is permissible under Singapore’s market conduct framework. Without such an exemption, stabilising purchases or offers to buy could be argued to fall within the scope of prohibitions in the SFA (specifically sections 197 and 198). By carving out qualifying stabilising actions, the Regulations support orderly market functioning during the early phase of a bond issuance.
From a compliance and enforcement perspective, the Regulations provide a structured “safe harbour” approach—though not an unlimited one. The exemption is narrow: it is tied to a specific notes issuance, a specific stabiliser, a fixed 30-day window, and specified counterparties (including a minimum consideration threshold for principal acquisitions). This narrowness is likely intentional to balance market integrity with legitimate stabilisation practices.
For practitioners, the key practical impact is that advisers must map the stabilisation plan against the legal conditions. That includes documenting:
- the identity of the Notes (issuer, guarantee, maturity, and issuance characteristics as defined);
- the identity and corporate capacity of the stabilising entity (Morgan Stanley & Co. International Limited or related corporations);
- the timing of stabilising trades (within 30 days from the date of issue); and
- the counterparty classification and transaction value (institutional investor, relevant person, or principal acquirer with at least $200,000 per transaction).
Failure to satisfy any condition could expose dealing activity to the underlying SFA prohibitions that the exemption otherwise disapplies.
Related Legislation
- Securities and Futures Act (Cap. 289) — in particular:
- Section 197 and Section 198 (market conduct provisions from which the exemption applies)
- Section 239(1) (definition of “securities”)
- Section 275(2) (definition of “relevant person”)
- Section 337(1) (authorising power for MAS to make exemptions)
- Futures Act (not directly operative in the extract, but referenced in the platform’s related legislation metadata)
- Stabilising Act (referenced in metadata; practitioners should confirm whether it is a separate instrument or a shorthand reference to stabilisation-related regulatory concepts)
- Timeline (platform 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. 57) Regulations 2005 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the official text for authoritative provisions.