Statute Details
- Title: Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Notes) (No. 7) Regulations 2005
- Act Code: SFA2001-S69-2005
- Legislation Type: Subsidiary legislation (Securities and Futures Act regulations)
- Authorising Act: Securities and Futures Act (Cap. 289)
- Enacting Authority: Monetary Authority of Singapore (MAS)
- Enacting Power: Section 337(1) of the Securities and Futures Act
- Commencement: 8 February 2005
- Key Provisions: Section 2 (definitions); Section 3 (exemption)
- Regulatory Focus: Exemption from market conduct restrictions for “stabilising action” relating to specified notes
- Specified Instrument: 5-year floating rate notes due February 2010 issued by Export-Import Bank of Thailand (up to US$150 million)
What Is This Legislation About?
The Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Notes) (No. 7) Regulations 2005 is a targeted regulatory instrument. In plain terms, it creates a limited exemption from certain “market conduct” provisions in the Securities and Futures Act (the “SFA”) for stabilising activities carried out in connection with a particular issuance of notes.
Market conduct rules are designed to prevent manipulation and unfair practices in securities markets. However, in many bond and notes offerings, stabilisation practices are used to support orderly trading and reduce volatility immediately after issuance. This regulation recognises that reality by carving out a narrow exemption—so long as the stabilising action is conducted within strict parameters (time window, persons involved, and the specific notes concerned).
Importantly, the regulation is not a general stabilisation regime for all securities. It is an “exemption for a specific deal” (identified by the issuer, instrument type, maturity, and issue size), and it applies only to stabilising actions taken within a defined period after issuance and by specified categories of participants.
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 8 February 2005. For practitioners, this matters because the exemption is only available for stabilising actions taken after the Regulations are in force (and, in any event, within the further time limits set out in Regulation 3).
2. Definitions (Regulation 2)
Regulation 2 defines two critical terms: “Notes” and “stabilising action”. These definitions are central because the exemption in Regulation 3 is triggered only when the activity falls within these defined concepts.
“Notes” are defined very specifically as the 5-year floating rate notes due February 2010 issued by Export-Import Bank of Thailand for a principal amount of up to US$150 million. This specificity is a hallmark of deal-specific exemptions: if the instrument is not the defined notes, the exemption does not apply.
“Stabilising action” is defined as an action taken in Singapore or elsewhere by BNP Paribas (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. This definition is also practical: it captures both actual purchases and commitments/undertakings to buy (offer or agreement to buy), not merely completed trades.
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, with respect to stabilising action taken by either:
- (a) a person referred to in section 274 of the SFA; or
- (b) a sophisticated investor as defined in section 275(2) of the SFA.
From a practitioner’s perspective, there are several layers to unpack:
(i) Which SFA provisions are exempted?
The exemption is expressly limited to sections 197 and 198. While the extract provided does not reproduce those sections, the structure indicates that those provisions are likely to contain prohibitions or restrictions relevant to market conduct—potentially including dealing restrictions, manipulation concerns, or related conduct rules. The regulation does not repeal or amend those sections; it simply provides that they “shall not apply” to the specified stabilising action within the specified conditions.
(ii) Time limitation: “within 30 days from the date of issue”
The exemption is time-bound. Stabilising action outside the 30-day window would not benefit from this exemption and would therefore fall back under the general SFA market conduct rules (including sections 197 and 198).
(iii) Person limitation: section 274 persons or sophisticated investors
The exemption is also conditional on who is taking the stabilising action. The regulation allows stabilising action to be exempt if it is taken with respect to the Notes by a person referred to in section 274 or by a sophisticated investor under section 275(2). This is a common regulatory technique: even where stabilisation is permitted, it is typically restricted to professional or eligible counterparties, and/or to investors with a higher capacity to understand and bear market risks.
(iv) Scope of “stabilising action” must match the definition
Even if the stabilising trades are within 30 days and involve eligible persons, the activity must still qualify as “stabilising action” as defined in Regulation 2. That definition is anchored to BNP Paribas (and related corporations) and to the purpose of stabilising or maintaining market price. In practice, documentation and compliance controls should therefore align with the defined purpose and the role of BNP Paribas or its related corporations.
4. Making and signature
The Regulations were made on 5 February 2005 by Koh Yong Guan, Managing Director of MAS. This is relevant for formal validity and for confirming the regulator’s authority and the date of enactment.
How Is This Legislation Structured?
These Regulations are short and deal with a single regulatory outcome. They consist of:
- Regulation 1: Citation and commencement (8 February 2005).
- Regulation 2: Definitions of “Notes” and “stabilising action”.
- Regulation 3: The exemption—stating that SFA sections 197 and 198 do not apply to stabilising action in respect of the defined Notes, within 30 days from issue, when carried out by eligible persons (section 274 persons or sophisticated investors).
There are no additional parts or complex schedules in the extract. The structure reflects a “deal-specific exemption” model: define the instrument and the stabilisation activity, then exempt the relevant market conduct provisions for a limited time and participant set.
Who Does This Legislation Apply To?
The Regulations apply to stabilising action in respect of the specified Export-Import Bank of Thailand notes (5-year floating rate notes due February 2010, up to US$150 million). The exemption is therefore relevant primarily to the parties involved in the issuance and any stabilisation programme connected to those notes.
As to persons, the exemption is available where stabilising action is taken by a person referred to in section 274 of the SFA or by a sophisticated investor under section 275(2). In addition, the definition of “stabilising action” is tied to BNP Paribas (or its related corporations). Accordingly, in practice, the exemption will be most relevant to the stabilising manager/arranger and its related entities, and to eligible counterparties or investors participating in the stabilisation process.
Why Is This Legislation Important?
This regulation is important because it illustrates how Singapore’s market conduct framework can accommodate legitimate market practices while still protecting market integrity. Stabilisation can be beneficial in the immediate post-issuance period by supporting liquidity and reducing disorderly price movements. Without an exemption, stabilisation activity might be treated as potentially problematic under general market conduct prohibitions.
For practitioners, the key significance lies in the precision of the exemption. The exemption is limited to: (i) a defined instrument; (ii) a defined stabilisation activity; (iii) a defined time window (30 days from issue); and (iv) defined categories of persons. This means compliance teams must be able to demonstrate that the stabilisation programme falls squarely within the regulatory definition and conditions.
From an enforcement and risk perspective, the regulation also signals that stabilisation is not a blanket permission. If stabilising trades occur outside the 30-day window, involve different instruments, or are carried out by persons not within the permitted categories, the exemption would not apply. In that scenario, the stabilising activity could be assessed under the general SFA market conduct provisions (including sections 197 and 198), potentially exposing firms and individuals to regulatory scrutiny.
Related Legislation
- Securities and Futures Act (Cap. 289) — particularly sections 197, 198, 274, and 275(2), and the regulation-making power in section 337(1).
- Futures Act (as referenced in the provided metadata context).
- Stabilising Act (as referenced in the provided metadata context).
- Timeline (legislation timeline reference in the provided metadata context).
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. 7) Regulations 2005 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the official text for authoritative provisions.