Statute Details
- Title: Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Notes) (No. 7) Regulations 2006
- Act Code: SFA2001-S103-2006
- Type: Subsidiary Legislation (SL)
- Authorising Act: Securities and Futures Act (SFA) (Cap. 289)
- Enacting Power: Section 337(1) of the Securities and Futures Act
- Commencement: 23 February 2006
- Status: Current version as at 27 March 2026
- Legislation Number: SL 103/2006
- Key Provisions: Section 2 (definitions); Section 3 (exemption)
- Regulator: Monetary Authority of Singapore (MAS)
- Relevant Market Conduct Provisions Exempted: 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. 7) Regulations 2006 (“Stabilising Action (Notes) Regulations”) creates a targeted exemption from certain market conduct rules in the Securities and Futures Act (“SFA”) for stabilising activity relating to a specific bond issuance.
In plain language, the Regulations recognise that, in some debt capital markets transactions, market participants may undertake limited buying or offers to buy securities shortly after issuance to help stabilise the trading price. Such activity can reduce volatility and support orderly trading. However, market conduct laws generally restrict manipulative or misleading conduct. This Regulations provides a narrow “safe harbour” so that stabilising action—if it meets the defined conditions—does not trigger the prohibitions in the SFA.
Importantly, the exemption is not general. It is tied to a defined set of “Notes” (a particular 10-year Euro fixed rate notes issuance by Shinsei Bank, Limited) and applies only within a specified time window after issue. It also limits who may conduct the stabilising action and sets a minimum consideration threshold for certain categories of participants.
What Are the Key Provisions?
Section 1 (Citation and commencement) provides the legal name of the Regulations and states that they come into operation on 23 February 2006. This matters for practitioners because the exemption only becomes available from the commencement date, and the time-limited nature of the stabilising window in Section 3 is calculated from the date of issue of the Notes, not from the Regulations’ commencement.
Section 2 (Definitions) is central to understanding the scope of the exemption. The Regulations define three key terms:
- “Notes”: the Regulations precisely identify the instrument—10-year Euro fixed rate notes due February 2016 issued by Shinsei Bank, Limited, for a principal amount of up to the Euro equivalent of US$1,000,000,000.
- “securities”: this adopts the meaning in section 239(1) of the SFA, ensuring that the exemption operates within the SFA’s broader regulatory definitions.
- “stabilising action”: this 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 practitioner’s perspective, these definitions do two things. First, they confine the exemption to a particular bond and a particular stabilising arranger/participant (Morgan Stanley & Co. International Limited and related corporations). Second, they tie the permitted conduct to a specific purpose—stabilising or maintaining market price—rather than any other trading rationale.
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, provided the stabilising action is taken with one of the following categories of persons:
- (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, but only if 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 practical terms, Section 3 creates a conditional safe harbour. The stabilising activity must satisfy all of the following:
- It must be stabilising action as defined (i.e., undertaken by Morgan Stanley & Co. International Limited or its related corporations, to buy or offer/agree to buy the specified Notes for stabilisation purposes).
- It must relate to the specified Notes (Shinsei Bank, 10-year Euro fixed rate notes due February 2016, up to the stated principal amount).
- It must occur within 30 days from the date of issue.
- It must be taken in transactions involving one of the permitted counterparty categories (institutional investor; relevant person; or principal acquirer meeting the minimum consideration threshold).
For lawyers advising on compliance, the most common risk areas are (i) whether the counterparty qualifies as an institutional investor or relevant person, and (ii) whether the transaction consideration threshold is met for principal acquisitions. The Regulations also require attention to the currency equivalence of the $200,000 threshold where consideration is in a foreign currency.
How Is This Legislation Structured?
The Regulations are structured as a short instrument with a conventional layout for subsidiary legislation:
- Section 1 sets out the citation and commencement.
- Section 2 provides definitions that determine the scope of the exemption (especially “Notes” and “stabilising action”).
- Section 3 contains the exemption from specified SFA provisions, including the time limit (30 days from issue) and the permitted counterparty categories and minimum consideration threshold.
There are no additional parts or detailed schedules in the extract provided; the instrument is essentially a targeted exemption clause supported by definitions.
Who Does This Legislation Apply To?
The exemption is directed at stabilising action in relation to the specified Notes and is therefore relevant primarily to the parties conducting or arranging stabilisation activity. The definition of “stabilising action” limits the conduct to actions taken by Morgan Stanley & Co. International Limited or its related corporations. Accordingly, the exemption is not a general permission for any market participant; it is tied to that specific stabilising actor.
However, Section 3 also governs who the stabilising transactions may involve. The stabilising action must be taken with (i) an institutional investor, (ii) a relevant person (as defined in the SFA), or (iii) a principal acquirer meeting the $200,000 per transaction minimum consideration threshold. This means that even where the stabiliser is within the defined group, the exemption may not apply if the stabilising trades are executed with counterparties outside these categories or below the threshold.
Why Is This Legislation Important?
This Regulations is important because it demonstrates how Singapore’s market conduct framework balances two competing policy objectives: (1) preventing manipulative or improper market behaviour, and (2) allowing legitimate market practices in capital markets, such as stabilisation, under controlled conditions.
By exempting stabilising action from sections 197 and 198 of the SFA (within the defined parameters), the Regulations reduces legal uncertainty for transaction participants. It allows stabilisation to occur without triggering the prohibitions that would otherwise apply to certain dealing activities. For issuers, arrangers, and trading desks, this can be critical to executing a bond issuance smoothly and in accordance with market conventions.
From an enforcement and compliance perspective, the conditional nature of the exemption is equally significant. The time limit (30 days from issue), the narrow definition of the Notes, and the counterparty restrictions create clear boundaries. Practitioners should treat these as compliance “gates” that must be evidenced—e.g., documentation of the issuance date, confirmation that the Notes fall within the defined instrument, records of counterparties’ status (institutional investor or relevant person), and confirmation that principal acquisitions meet the minimum consideration threshold.
Finally, the Regulations’ cross-references to the SFA (notably the definition of “relevant person” in section 275(2)) highlight the need for careful statutory interpretation. A practitioner should not assume that “institutional investor” or “relevant person” aligns with common market terminology; instead, the SFA definitions must be applied precisely.
Related Legislation
- Securities and Futures Act (Cap. 289) — in particular, sections 197, 198, 239(1), 275(2), and the authorising 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 (for version control and confirming the current version as at 27 March 2026)
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 2006 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the official text for authoritative provisions.