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)
- Power Used: Section 337(1) of the Securities and Futures Act
- Enacting Authority: Monetary Authority of Singapore (MAS)
- Commencement: 9 December 2005
- Legislative Status: Current version as at 27 March 2026 (per the legislation record)
- Key Provisions: Section 2 (definitions); Section 3 (exemption)
- Primary Exempted Provisions: Sections 197 and 198 of the Securities and Futures Act
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 Exemption Regulations”) creates a targeted regulatory exemption from certain market conduct rules in the Securities and Futures Act (the “SFA”). In plain language, it allows specified market participants to take “stabilising action” in relation to a particular tranche of notes without being treated as breaching the general prohibitions or restrictions that would otherwise apply.
The exemption is narrow in both subject matter and timing. It applies only to “stabilising action” taken in respect of “Notes” that are specifically defined in the Regulations—namely, 10-year fixed rate senior notes due December 2015 issued by Chinese Future Corporation (up to US$400 million) and unconditionally and absolutely guaranteed by Chinese Future Limited. It also applies only within a limited window: within 30 days from the date of issue of the Notes.
Practically, the Regulations recognise that stabilisation activity—such as buying (or offering to buy) securities to support or maintain market price during the early trading period—may be commercially and market-structure relevant. However, stabilisation can also create risks of market distortion. The SFA’s general market conduct provisions (sections 197 and 198) are therefore designed to prevent improper price manipulation or misleading conduct. This subsidiary legislation provides a controlled carve-out, permitting stabilisation for defined actors and transactions that meet specified thresholds.
What Are the Key Provisions?
1. Citation and commencement (Section 1)
Section 1 provides the short title and commencement date. The Regulations “shall come into operation on 9th December 2005.” For practitioners, this matters when assessing whether stabilisation conduct occurred after the exemption became effective. The Regulations were made on 28 November 2005 by MAS, but they only legally take effect on 9 December 2005.
2. Definitions (Section 2)
Section 2 is critical because it tightly constrains the exemption. The Regulations define three key terms:
- “Notes” are precisely identified: 10-year fixed rate senior notes due December 2015 issued by Chinese Future Corporation for a principal amount up to US$400 million, unconditionally and absolutely guaranteed by Chinese Future Limited.
- “securities” adopts the meaning in section 239(1) of the SFA, ensuring consistency with the parent Act’s definitional framework.
- “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.
From a compliance perspective, the definition is both actor-specific and conduct-specific. Only Morgan Stanley & Co. International Limited and its related corporations can rely on the exemption, and only stabilising purchases (or offers/agreements to purchase) aimed at price stabilisation are covered. Other dealers, issuers, or investors cannot assume the exemption applies merely because they engage in similar market activity.
3. The exemption (Section 3)
Section 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 the Notes, within 30 days from the date of issue, with respect to stabilising action taken by or 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 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
In effect, the exemption is conditional on both time (within 30 days from issue) and counterparty/participant category (institutional investors, relevant persons, or principal acquirers meeting the minimum consideration threshold). This structure helps ensure that stabilisation activity is limited to professional or sufficiently substantial market participants, reducing the risk that small or retail-scale trading could be used to create misleading price signals.
Transaction threshold significance (Section 3(c))
The $200,000 minimum consideration requirement is a notable compliance checkpoint. It applies to “a person who acquires the Notes as principal.” The threshold is per transaction, and it covers both cash and non-cash consideration (including exchange of securities or other assets). For legal teams advising on documentation and execution, this means deal terms and settlement mechanics should be reviewed to confirm that the consideration structure will satisfy the statutory threshold if the exemption is to be relied upon.
Practical compliance note
Although the extract does not reproduce the text of sections 197 and 198 of the SFA, the exemption’s language indicates that those provisions would otherwise restrict or prohibit the relevant conduct. Therefore, reliance on the exemption should be treated as a formal legal basis to permit stabilising trades that might otherwise be characterised as market conduct breaches. Practitioners should ensure that stabilising activity is documented as such, occurs within the 30-day window, and is undertaken by the defined stabiliser (Morgan Stanley & Co. International Limited or related corporations) and in transactions that fit the participant categories.
How Is This Legislation Structured?
The Regulations are brief and consist of an enacting formula and three substantive sections:
- Section 1 (Citation and commencement): sets the short title and commencement date (9 December 2005).
- Section 2 (Definitions): defines “Notes,” “securities,” and “stabilising action,” with “Notes” and “stabilising action” being particularly specific.
- Section 3 (Exemption): provides the exemption from the application of SFA sections 197 and 198, subject to timing and participant/consideration conditions.
There are no additional parts or schedules in the extract provided, reflecting the Regulations’ purpose as a targeted, deal-specific market conduct carve-out rather than a broad regulatory framework.
Who Does This Legislation Apply To?
The exemption is not written as a general permission for “any person.” It is tightly scoped to stabilising action taken by Morgan Stanley & Co. International Limited (or its related corporations) in relation to the defined Notes. Accordingly, the primary beneficiaries are the stabilising entity and its related corporations, acting in Singapore or elsewhere, when they engage in stabilisation purchases or offers/agreements to purchase.
However, Section 3 also addresses who the stabilising action may involve—namely, transactions with an institutional investor, a “relevant person” (as defined in section 275(2) of the SFA), or a principal acquirer meeting the $200,000 minimum consideration threshold. This means that even if the stabiliser is eligible, the exemption’s protection depends on the counterparty category and the economics of the transaction.
Why Is This Legislation Important?
This Regulations is important because it demonstrates how Singapore’s market conduct regime balances two competing objectives: (1) preventing manipulative or misleading trading practices, and (2) allowing legitimate market stabilisation in connection with securities issuance. Stabilisation can reduce volatility and support orderly price discovery during the early trading period after issuance. Without a tailored exemption, stabilisation activity could be difficult to execute legally, particularly where stabilisation trades resemble conduct that market conduct rules seek to deter.
For practitioners, the key legal value lies in the precision of the exemption. It is deal-specific (defined Notes), actor-specific (Morgan Stanley & Co. International Limited and related corporations), and time-limited (30 days from issue). It also includes participant and consideration conditions that must be satisfied for the exemption to apply. This makes the Regulations highly relevant to lawyers advising on:
- issuance documentation and offering mechanics for the relevant notes;
- trading and execution policies for stabilisation desks;
- counterparty eligibility and transaction structuring (including non-cash consideration);
- regulatory risk assessments and internal compliance controls.
Finally, because the exemption operates by removing the application of SFA sections 197 and 198, it should be treated as a formal legal basis rather than a general “market practice” allowance. Where stabilisation activity falls outside the defined scope—wrong notes, wrong stabiliser, wrong time period, or wrong counterparty category—the exemption would not protect the conduct, and the general market conduct rules would likely apply.
Related Legislation
- Securities and Futures Act (Cap. 289) — including sections 197, 198, 239(1), 275(2), and the authorising power in section 337(1).
- Futures Act (as referenced in the legislation metadata timeline context).
- Stabilising Act (as referenced in the legislation metadata timeline context).
- Timeline / Legislation timeline (for version control and amendments history).
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.