Statute Details
- Title: Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Notes) (No. 60) Regulations 2005
- Act Code: SFA2001-S851-2005
- Legislation Type: Subsidiary Legislation (SL)
- Authorising Act: Securities and Futures Act (Cap. 289) — powers under section 337(1)
- Commencement: 27 December 2005
- Primary Purpose: Provides a targeted exemption from certain market conduct restrictions for stabilising transactions in specified notes
- Key Sections: Section 2 (definitions); Section 3 (exemption)
- Regulatory Authority: Monetary Authority of Singapore (MAS)
- Instrument Reference: SL 851/2005 (dated 27 Dec 2005)
- Notes Covered: 7-year 6.75% convertible subordinated notes due December 2012 issued by Perseverance Corporation Limited (up to AUD 37 million)
What Is This Legislation About?
The Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Notes) (No. 60) Regulations 2005 is a narrow, transaction-specific regulatory instrument. In plain terms, it allows certain “stabilising” trading activity in a particular set of notes—without triggering specified prohibitions in the Securities and Futures Act (the “SFA”).
Market conduct rules in the SFA are designed to prevent manipulation and misleading market behaviour. However, in some capital markets transactions, issuers and their financial intermediaries may undertake stabilising actions to support orderly trading and reduce price volatility immediately after issuance. This regulation recognises that stabilisation, when properly constrained, can serve a legitimate market function.
Accordingly, the Regulations carve out an exemption from sections 197 and 198 of the SFA for stabilising actions taken in relation to the defined “Notes” within a defined time window and by defined categories of counterparties. The exemption is not general; it is limited to the specified notes, the specified stabilising actors, and the specified period after issuance.
What Are the Key Provisions?
Section 1 (Citation and commencement) provides the legal identity of the instrument and its effective date. The Regulations may be cited as the “Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Notes) (No. 60) Regulations 2005” and come into operation on 27 December 2005. For practitioners, this matters when assessing whether stabilising activity occurred within the regulatory framework.
Section 2 (Definitions) is central because the exemption depends entirely on the precise meaning of the defined terms. Three definitions are particularly important:
- “Notes”: The Regulations define the Notes very specifically as the 7-year 6.75% convertible subordinated notes due December 2012 issued by Perseverance Corporation Limited for a principal amount of up to AUD 37 million. This specificity means the exemption cannot be relied upon for other instruments, even if they are similar (e.g., other tranches, different coupons, or different issuers).
- “securities”: The term is cross-referenced to the SFA definition in section 239(1). This ensures that the Notes are treated within the broader SFA securities framework.
- “stabilising action”: This is defined as an action taken in Singapore or elsewhere by Barclays Bank PLC (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 actor- and purpose-specific: it is limited to Barclays (and related corporations) and to actions intended to stabilise/maintain price.
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 any of the Notes, within 30 days from the date of issue of the Notes, 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 Act
- (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 foreign currency), whether paid in cash or by exchange of securities or other assets.
In practical terms, Section 3 creates a controlled “safe space” for stabilisation. The exemption is time-limited (30 days from issue), instrument-limited (the defined Notes), actor-limited (Barclays and related corporations, per the definition of stabilising action), and counterparty-limited (institutional investors, relevant persons, or high-value principal acquirers meeting the $200,000 threshold).
For legal analysis, two features are especially important:
- Exemption from specific SFA provisions: The Regulations do not repeal or broadly override market conduct rules; they only exempt stabilising actions from the application of sections 197 and 198. A practitioner should therefore still consider whether other SFA provisions (including general market manipulation prohibitions, disclosure requirements, or other conduct rules) may apply to the same trading activity.
- Transaction value threshold for principal acquirers: Where the counterparty is not an institutional investor or a relevant person, the exemption can still apply if the acquirer is acting as principal and the consideration is at least $200,000 per transaction. This threshold is designed to exclude small retail participation and to ensure that stabilisation is conducted in a more sophisticated and controlled market segment.
How Is This Legislation Structured?
The Regulations are structured as a short instrument with a conventional layout:
- Section 1 sets out the citation and commencement date.
- Section 2 provides definitions that determine the scope of the exemption.
- Section 3 contains the exemption itself, specifying which SFA provisions are disapplied, the time limit, the Notes to which it applies, and the permitted categories of counterparties.
Notably, the Regulations do not include extensive procedural requirements or detailed stabilisation mechanics (such as reporting obligations, maximum quantities, or price limits) within the text provided. Instead, the instrument relies on the defined scope and the disapplication of the specified SFA sections. In practice, lawyers should therefore cross-check the broader SFA framework and any related MAS guidance or conditions that may govern stabilisation conduct.
Who Does This Legislation Apply To?
Although the Regulations are addressed to stabilising action, the practical beneficiaries and regulated actors are identifiable through the definitions. The exemption is available only for stabilising actions taken by Barclays Bank PLC or its related corporations, as defined in Section 2. Therefore, the primary regulated party is the stabilising intermediary (Barclays group) conducting trades in the specified Notes.
However, the exemption also depends on the counterparty to the stabilising trade. Section 3 restricts the exemption to stabilising actions undertaken with institutional investors, relevant persons (as defined in the SFA), or principal acquirers meeting the $200,000 minimum consideration requirement. This means that even if Barclays undertakes stabilising trades, the exemption may not apply if the trades are executed with counterparties outside these categories.
Why Is This Legislation Important?
This Regulations is important because it illustrates how Singapore’s market conduct regime balances two competing objectives: (1) preventing manipulation and unfair trading practices, and (2) allowing legitimate market-making and stabilisation practices in connection with securities issuance. Stabilisation can be commercially necessary in certain offerings, particularly where the issuer and underwriters seek to support an orderly aftermarket for newly issued instruments.
From a practitioner’s perspective, the key value of the Regulations lies in its precision. It provides a legally recognised exemption from the application of sections 197 and 198 of the SFA—but only if all conditions are satisfied. In transaction documentation and compliance reviews, counsel should treat this as a checklist instrument: confirm the instrument identity (“Notes”), confirm the stabilising actor (Barclays group), confirm the timing (within 30 days from issue), and confirm the counterparty category and, where relevant, the $200,000 consideration threshold.
Additionally, because the exemption is limited to disapplying specific SFA provisions, lawyers should not assume that stabilisation activity is automatically lawful in all respects. A robust compliance approach would require assessing whether other SFA provisions, licensing/authorisation requirements, disclosure obligations, and any MAS regulatory expectations apply to the same trading conduct. The Regulations should be viewed as a targeted legal permission within a broader regulatory landscape.
Related Legislation
- Securities and Futures Act (Cap. 289) — particularly sections 197, 198, 239(1), 275(2), and 337(1)
- Futures Act (as referenced in the provided metadata)
- Stabilising Act (as referenced in the provided metadata)
- Timeline (as referenced in the provided metadata)
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. 60) Regulations 2005 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the official text for authoritative provisions.