Statute Details
- Title: Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Notes) (No. 8) Regulations 2005
- Act Code: SFA2001-S85-2005
- Type: Subsidiary Legislation (SL)
- Authorising Act: Securities and Futures Act (Cap. 289)
- Enacting power: Section 337(1) of the Securities and Futures Act
- Commencement: 18 February 2005
- Legislative status: Current version as at 27 March 2026 (per the platform timeline)
- Key provisions: Section 2 (definitions); Section 3 (exemption)
- Regulatory focus: Exemption from market conduct restrictions for “stabilising action” in relation to specified notes
What Is This Legislation About?
The Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Notes) (No. 8) Regulations 2005 is a targeted regulatory instrument. In plain language, it creates a narrow exemption from certain market conduct rules under the Securities and Futures Act (the “SFA”) for stabilising activities carried out in connection with a particular bond issuance.
Stabilising action is a common feature of certain capital markets transactions. When new securities are issued, market prices can be volatile in the early trading period. Under market practice, an issuer, underwriter, or related financial institution may take steps to support or maintain the trading price, typically by buying securities (or offering to buy) in a controlled manner. However, stabilisation can also raise concerns about market manipulation. Singapore’s market conduct framework therefore restricts stabilisation unless it falls within an approved exemption.
This set of Regulations does not create a general stabilisation regime. Instead, it identifies a specific instrument—“Notes” issued by a named entity—and a specific stabiliser—J.P. Morgan Securities Ltd. (and its related corporations). It then exempts stabilising action from the application of two SFA provisions (Sections 197 and 198) if the stabilisation occurs within a defined time window and is undertaken for specified categories of counterparties.
What Are the Key Provisions?
Section 1: Citation and commencement. This section provides the short title and states that the Regulations come into operation on 18 February 2005. For practitioners, the commencement date matters because the exemption is time-sensitive: stabilising action must occur within the statutory window described in Section 3.
Section 2: Definitions. The Regulations define two critical terms that control the scope of the exemption:
- “Notes” are defined very specifically as the 3-year fixed rate senior notes due February 2008 issued by Equitable PCI Bank, Inc. for a principal amount of up to US$150 million.
- “stabilising action” means an action taken in Singapore or elsewhere by J.P. Morgan Securities Ltd. (or any of its related corporations) to buy, or 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.
These definitions are the gatekeepers. If the instrument is not the specified Notes, or if the stabiliser is not J.P. Morgan Securities Ltd. (or its related corporations), the exemption will not apply. Likewise, the conduct must be directed at stabilising or maintaining market price.
Section 3: Exemption. This 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 taken with either:
- (a) a person referred to in section 274 of the Act; or
- (b) a sophisticated investor as defined in section 275(2) of the Act.
In practical terms, Section 3 creates a conditional “safe harbour” for stabilisation. The exemption is time-limited (30 days from issue) and counterparty-limited (only certain categories of persons under section 274 or sophisticated investors under section 275(2)).
Why the counterparty limitation matters. The Regulations do not simply permit stabilisation generally. They restrict stabilisation to dealings with particular counterparties. For counsel and compliance teams, this means transaction documentation, dealing records, and investor classification become essential. If stabilising purchases or offers to buy are made with a counterparty outside the permitted categories, the exemption may fail, exposing the stabiliser to the underlying SFA prohibitions in Sections 197 and 198.
What is being exempted (Sections 197 and 198). While the extract does not reproduce Sections 197 and 198, the legislative structure indicates that these provisions are part of the SFA’s market conduct rules—likely prohibitions or restrictions relevant to market manipulation or improper dealing. The Regulations’ effect is to remove the legal application of those provisions to qualifying stabilising action. In other words, the stabiliser can conduct the specified stabilisation without breaching those particular SFA sections, but only within the defined conditions.
How Is This Legislation Structured?
The Regulations are concise and consist of three main sections:
- Section 1 (Citation and commencement): establishes the short title and commencement date.
- Section 2 (Definitions): defines “Notes” and “stabilising action” with high specificity, including the issuer, instrument characteristics, and the stabilising entity.
- Section 3 (Exemption): provides the exemption from the application of SFA Sections 197 and 198, conditioned on timing (within 30 days from issue) and permitted counterparties (section 274 persons or sophisticated investors).
Because the Regulations are short, the practitioner’s task is largely interpretive: confirming whether the transaction falls within the defined “Notes,” whether the stabiliser is within the defined stabilising entity, whether the action is within the 30-day window, and whether the counterparties meet the statutory categories.
Who Does This Legislation Apply To?
Although the Regulations are framed as an exemption from the SFA for stabilising action, in substance they apply to the parties conducting stabilisation and the counterparties involved in stabilising dealings.
The exemption is limited to stabilising action taken by J.P. Morgan Securities Ltd. or its related corporations. Therefore, even if another firm undertakes similar stabilisation for the same Notes, the exemption would not automatically apply unless that firm is within the defined stabiliser group. Additionally, the exemption only covers stabilising action “with” persons falling within section 274 or sophisticated investors under section 275(2). This means that the investor classification and dealing counterparties are central to compliance.
Why Is This Legislation Important?
This Regulations is important because it illustrates how Singapore’s market conduct regime balances two competing objectives: (1) allowing legitimate market stabilisation practices in capital markets, and (2) preventing those practices from becoming a vehicle for manipulation or unfair dealing.
For practitioners, the key significance lies in the conditional nature of the exemption. The exemption is not a blanket permission. It is instrument-specific, entity-specific, time-bound, and counterparty-bound. In practice, this requires careful coordination between legal counsel, transaction teams, and compliance officers to ensure that stabilisation activities are structured and recorded in a way that clearly fits within the exemption.
From an enforcement perspective, if stabilising action occurs outside the 30-day period, or if stabilising dealings are made with counterparties outside the permitted categories, the stabiliser may lose the exemption and face potential exposure under the underlying SFA provisions (Sections 197 and 198). Accordingly, the Regulations should be treated as a compliance checklist: confirm the Notes, confirm the stabiliser, confirm the timing, and confirm the counterparty status.
Related Legislation
- Securities and Futures Act (Cap. 289) — in particular:
- Section 337(1) (authorising power for making exemptions)
- Sections 197 and 198 (market conduct provisions from which exemption is granted)
- Section 274 (category of persons for permitted dealings under the exemption)
- Section 275(2) (definition of “sophisticated investor”)
- Futures Act (listed in the platform metadata as related legislation)
- Stabilising Act (listed in the platform metadata as related legislation)
- Timeline (platform reference for version control)
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. 8) Regulations 2005 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the official text for authoritative provisions.