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
- Legislation Type: Subsidiary Legislation (SL)
- Authorising Act: Securities and Futures Act (Cap. 289)
- Enacting Power: Section 337(1) of the Securities and Futures Act
- Commencement: 9 December 2005
- Regulation Number: SL 790/2005
- Key Provisions: Regulation 1 (Citation and commencement), Regulation 2 (Definitions), Regulation 3 (Exemption)
- Relevant Act Provisions Exempted: Sections 197 and 198 of the Securities and Futures Act
- Regulatory Authority: Monetary Authority of Singapore (MAS)
- Status: Current version as at 27 March 2026 (per the legislation record)
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 is a targeted regulatory instrument. In essence, it creates a narrow exemption from certain market conduct restrictions in the Securities and Futures Act for a specific type of stabilising activity relating to a particular bond issuance.
In plain language, the Regulations recognise that, during the initial period after a new debt security is issued, market participants may engage in “stabilising action” to help maintain orderly trading and prevent excessive price volatility. However, stabilisation can resemble prohibited conduct if it is not clearly authorised. This is why the Regulations carve out an exemption: they allow stabilising purchases or offers to buy, but only in defined circumstances and only for a defined set of persons and a defined timeframe.
Importantly, the exemption is not general. It is tied to “Notes” that are specifically described in the Regulations—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. The stabilising activity is also defined by reference to the stabilising arranger and its related corporations (Morgan Stanley & Co. International Limited and related corporations). This makes the instrument highly relevant for practitioners advising on underwriting, distribution, and post-issuance market support activities.
What Are the Key Provisions?
Regulation 1 (Citation and commencement) provides the formal citation and states that the Regulations come into operation on 9 December 2005. For practitioners, this matters when assessing whether stabilising activity occurred within the legal window of authorisation.
Regulation 2 (Definitions) is the backbone of the Regulations because it precisely defines the objects and actors to which the exemption applies.
First, “Notes” are defined with specificity: they are 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, and they are unconditionally and absolutely guaranteed by Chinese Future Limited. This definition is crucial: stabilising action in respect of other notes, even if similar in nature, would not automatically fall within the exemption.
Second, “securities” has the same meaning as in section 239(1) of the Securities and Futures Act. This ensures that the exemption operates within the Act’s established definitional framework.
Third, “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. The definition is broad enough to cover not only actual purchases but also offers or agreements to buy—activities that are often relevant in stabilisation programmes and distribution mechanics.
Regulation 3 (Exemption) is the operative provision. It states that sections 197 and 198 of the Securities and Futures 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, provided the stabilising action is taken with one of the following categories of counterparties:
(a) an institutional investor
(b) a relevant person as defined in section 275(2) of the Act
(c) a person who acquires the Notes as principal, but only if the consideration for the acquisition 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.
From a practitioner’s perspective, Regulation 3 does two things simultaneously: (1) it limits the exemption to a 30-day post-issue window, and (2) it limits the exemption to stabilising transactions involving specified counterparty types and, in the case of principal acquirers, a minimum consideration threshold. This is a classic regulatory design: it permits stabilisation but seeks to ensure that the stabilisation is conducted in a controlled and professional market context.
While the extract does not reproduce sections 197 and 198 of the Securities and Futures Act, the exemption’s structure indicates that those sections likely impose prohibitions or restrictions relevant to market conduct (for example, rules against manipulative or misleading trading practices, or restrictions on certain dealings). The Regulations effectively suspend the application of those prohibitions for the specified stabilising conduct, but only when the conditions are met.
How Is This Legislation Structured?
The Regulations are structured in a straightforward, three-regulation format:
Regulation 1 sets out the citation and commencement date.
Regulation 2 provides definitions, including the precise description of the Notes and the definition of stabilising action and the stabiliser.
Regulation 3 contains the exemption, specifying (i) which Act provisions are disapplied, (ii) the 30-day timeframe from the date of issue, and (iii) the categories of persons with whom stabilising action may be taken, including the $200,000 minimum consideration threshold for principal acquirers.
Who Does This Legislation Apply To?
The Regulations apply to stabilising action taken by Morgan Stanley & Co. International Limited or its related corporations in respect of the defined Notes. The exemption is therefore not directed at the general investing public; it is directed at the stabilising entity and its group, and it governs how that entity may conduct stabilisation activities without triggering the disapplied provisions of the Securities and Futures Act.
In addition, the exemption is conditional on the counterparty to the stabilising dealings. Stabilising action must be taken with an institutional investor, or a relevant person (as defined in section 275(2) of the Act), or with a principal acquirer meeting the minimum consideration requirement of $200,000 per transaction (or equivalent in foreign currency). This means that even if the stabiliser is acting within the 30-day window, the exemption may not apply if the counterparty category or consideration threshold is not satisfied.
Why Is This Legislation Important?
This Regulations is important because it demonstrates how Singapore law balances two competing objectives: (1) preventing market manipulation and improper market conduct, and (2) allowing legitimate market support mechanisms during the distribution and early trading period of a new issue.
For practitioners—particularly those advising issuers, arrangers, underwriters, and trading desks—the exemption provides a compliance pathway. Stabilisation activities can be commercially valuable, but they can also create regulatory risk if they are interpreted as prohibited conduct under the Securities and Futures Act. By disapplying sections 197 and 198 for specified stabilising action, the Regulations reduce uncertainty and help ensure that stabilisation programmes are structured to fit within a recognised legal framework.
From an enforcement and risk-management perspective, the conditions in Regulation 3 are the critical compliance checkpoints. The 30-day timeframe is a hard limit; stabilising action outside that period would not benefit from the exemption. Likewise, the counterparty categories and the $200,000 minimum consideration threshold for principal acquirers are likely to be scrutinised. Practitioners should therefore ensure that trade documentation, allocation records, and counterparty classification are capable of evidencing compliance with these conditions.
Finally, the Regulations’ specificity—naming the Notes and the stabiliser—means that it is not a “template” exemption for other issuances. Lawyers should treat it as a bespoke instrument and verify whether a similar exemption exists for other bond programmes or whether a different regulatory approach is required.
Related Legislation
- Securities and Futures Act (Cap. 289) — particularly sections 197, 198, 239(1), 275(2), and the authorising power in section 337(1)
- Futures Act (as referenced in the legislation metadata)
- Stabilising Act (as referenced in the legislation metadata)
- Legislation Timeline (for version control and amendments tracking)
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.