Statute Details
- Title: Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Notes) (No. 6) Regulations 2006
- Act Code: SFA2001-S70-2006
- Type: Subsidiary Legislation (SL)
- Authorising Act: Securities and Futures Act (Cap. 289)
- Authorising Provision: Section 337(1) of the Securities and Futures Act
- Legislative Citation: SL 70/2006
- Commencement: 6 February 2006
- Status: Current version as at 27 March 2026
- Key Provisions: Section 2 (Definitions); Section 3 (Exemption)
What Is This Legislation About?
The Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Notes) (No. 6) Regulations 2006 (“Stabilising Action (Notes) Regulations”) creates a targeted regulatory exemption from certain market conduct prohibitions under the Securities and Futures Act (the “SFA”). In practical terms, it allows specified market participants to take “stabilising action” in relation to a particular issuance of notes without falling foul of the SFA’s restrictions on conduct that could otherwise be characterised as market manipulation or improper trading.
Stabilisation is a common feature of debt capital markets. When new securities are issued, liquidity and price discovery may be thin at the outset. Under stabilisation arrangements, dealers may buy (or offer to buy) securities to support the market price during an initial period. The law recognises that, if done within defined limits and for legitimate stabilisation purposes, such activity may not be harmful in the same way as manipulative conduct.
This particular set of Regulations is highly specific: it defines “Notes” as a particular class of guaranteed fixed rate senior callable perpetual notes issued in February 2006 by Glencore Finance (Europe) S.A., up to a principal amount of US$750 million, and it defines “stabilising action” as actions taken by Citigroup Global Markets Limited and HSBC Bank plc (and their related corporations) to buy or offer to buy those Notes in Singapore or elsewhere to stabilise or maintain market price. The exemption is therefore not a general stabilisation regime; it is a bespoke carve-out for a defined transaction and defined actors.
What Are the Key Provisions?
Section 1 (Citation and commencement) provides the formal name of the Regulations and states that they come into operation on 6 February 2006. For practitioners, this matters because the exemption is time-bound: stabilising action must occur within a specified period from the date of issue of the Notes. Knowing the commencement date helps confirm that the exemption is available for the relevant issuance window.
Section 2 (Definitions) is the backbone of the Regulations. It defines three key terms:
- “Notes”: These are guaranteed fixed rate senior callable perpetual notes issued in February 2006 by Glencore Finance (Europe) S.A. for up to US$750 million. The Notes are issued under Glencore’s Euro Medium Term Note Programme and are guaranteed by Glencore International AG and Glencore AG. This definition is detailed and transaction-specific, ensuring the exemption cannot be stretched to other instruments.
- “securities”: This adopts the meaning in section 239(1) of the SFA, linking the exemption to the SFA’s broader definitional framework.
- “stabilising action”: This is defined as an action taken in Singapore or elsewhere by Citigroup Global Markets Limited and HSBC Bank plc (or their 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 inclusion of “offer or agree to buy” is important: it captures not only actual purchases but also commitments that may influence market expectations.
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 carried out with one of the following categories of 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, 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 compliance perspective, Section 3 does two things simultaneously. First, it creates a time-limited window (30 days from issue) during which stabilisation is exempt. Second, it imposes counterparty and minimum consideration thresholds to limit stabilisation activity to sophisticated or high-value participants. This reduces the risk that stabilisation could be used to disguise improper trading with retail or low-value counterparties.
Although the text provided does not reproduce Sections 197 and 198 of the SFA, the exemption’s structure indicates that those sections contain prohibitions or restrictions relevant to market conduct. The Regulations do not repeal those provisions; they carve out a narrow exception. Practitioners should therefore treat the exemption as conditional: if stabilising action falls outside the defined Notes, outside the defined actors, outside Singapore/elsewhere scope as described, outside the 30-day period, or outside the permitted counterparties/minimum consideration, the SFA prohibitions would apply.
How Is This Legislation Structured?
The Regulations are short and consist of an enacting formula and three substantive sections:
- Section 1 (Citation and commencement): identifies the Regulations and sets the commencement date (6 February 2006).
- Section 2 (Definitions): defines “Notes,” “securities,” and “stabilising action,” thereby limiting the scope of the exemption to a specific issuance and specific stabilising actors.
- Section 3 (Exemption): provides the exemption from SFA Sections 197 and 198 for stabilising action in respect of the Notes within 30 days from issue, subject to permitted counterparty categories and a minimum consideration threshold for principal acquisitions.
There are no additional parts or schedules in the extract. The Regulations are therefore best understood as a targeted legal instrument rather than a comprehensive stabilisation framework.
Who Does This Legislation Apply To?
The exemption is directed at stabilising action taken by Citigroup Global Markets Limited and HSBC Bank plc (and their related corporations) in relation to the defined Glencore Notes. In effect, the Regulations are relevant primarily to the dealers arranging the issuance and conducting stabilisation, as well as to their compliance teams and legal advisers.
However, the exemption’s conditionality means that the counterparty to the stabilising trades also matters. Stabilising action must be conducted with an institutional investor, a relevant person (under section 275(2) of the SFA), or a principal acquirer meeting the $200,000 minimum consideration requirement per transaction. Accordingly, issuers, lead managers, and trading desks must ensure that counterparties and trade documentation align with these categories.
Why Is This Legislation Important?
This Regulations matters because it provides legal certainty for a specific stabilisation activity that would otherwise risk triggering market conduct prohibitions under the SFA. In debt issuance practice, stabilisation can be commercially important for price formation and liquidity in the early trading period. By carving out stabilisation within defined boundaries, the Regulations support legitimate market-making and stabilisation activities while maintaining regulatory safeguards.
From an enforcement and compliance standpoint, the key significance lies in the precision of the exemption. The law does not offer a blanket permission to stabilise any security. Instead, it is tightly bounded by: (i) the identity and characteristics of the Notes; (ii) the identity of the stabilising entities; (iii) the 30-day post-issue period; and (iv) the permitted counterparty categories and minimum consideration threshold. This design reflects a regulatory balancing act: enabling stabilisation while preventing it from becoming a vehicle for improper trading.
For practitioners advising on transaction documentation, trading procedures, and regulatory filings, the Regulations highlight the need for robust internal controls. Stabilisation desks should maintain evidence that trades were undertaken for stabilisation purposes, within the permitted timeframe, and with counterparties falling within the defined categories. Where principal acquisitions are involved, documentation should confirm that the consideration meets the $200,000 threshold (or equivalent) per transaction, including where consideration is paid by exchange of securities or other assets.
Related Legislation
- Securities and Futures Act (Cap. 289) — in particular, Sections 197 and 198 (to which the exemption applies) and Section 337(1) (the enabling provision); also Section 239(1) (definition of “securities”) and Section 275(2) (definition of “relevant person”).
- Futures Act — referenced in the statute metadata (relevant for broader market conduct context, though not directly reproduced in the extract).
- Stabilising Act — referenced in the statute metadata (relevant for broader stabilisation concepts, though the present Regulations are the operative instrument for this specific Notes issuance).
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. 6) Regulations 2006 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the official text for authoritative provisions.