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 legislation portal)
- Key provisions: Section 2 (definitions); Section 3 (exemption)
- Regulatory body: Monetary Authority of Singapore (MAS)
- Instrument number: SL 85/2005
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 (“Stabilising Action Exemption Regulations”) is a targeted regulatory instrument made under the Securities and Futures Act (SFA). In substance, it creates a narrow exemption from certain market conduct restrictions in the SFA for stabilising activities carried out in relation to a specific issuance of notes.
Market conduct rules in the SFA are designed to protect investors and maintain fair and orderly markets. They generally restrict certain trading and dealing behaviours that could distort price formation. However, in some capital market transactions—particularly during or shortly after issuance—stabilisation practices are sometimes permitted under carefully defined conditions. Stabilisation is intended to reduce excessive volatility and support orderly trading, rather than to manipulate prices.
This Regulations set out a time-limited and transaction-specific carve-out. It exempts stabilising actions taken in respect of particular “Notes” (defined precisely as 3-year fixed rate senior notes due February 2008 issued by Equitable PCI Bank, Inc., up to US$150 million) if those actions are taken within 30 days from the date of issue and are undertaken with specified categories of counterparties (a person referred to in section 274 of the SFA, or a “sophisticated investor” as defined in section 275(2) of the SFA).
What Are the Key Provisions?
Section 1: Citation and commencement. The Regulations may be cited by their short title and come into operation on 18 February 2005. For practitioners, this matters when assessing whether stabilising conduct occurred within the regulatory framework and whether any compliance analysis must be anchored to the commencement date.
Section 2: Definitions. The Regulations define two core terms that control the scope of the exemption:
- “Notes” are defined narrowly 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. This definition is critical: the exemption is not a general stabilisation permission for any notes; it is tied to a particular issuance and issuer.
- “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 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 restrictive: it identifies the stabiliser (J.P. Morgan Securities Ltd. and related corporations) and the permitted conduct (buying or offering/agreement to buy) for stabilisation purposes.
Section 3: Exemption from sections 197 and 198 of the SFA. This is the operative provision. It states that sections 197 and 198 of the Act 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 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.
While the extract does not reproduce sections 197, 198, 274, and 275, the structure indicates that the SFA contains (i) market conduct prohibitions or restrictions relevant to dealing/trading and (ii) categories of counterparties that are treated differently for regulatory purposes. The exemption therefore functions as a conditional permission: stabilisation is allowed, but only within a limited time window and only when counterparties fall within specified regulatory categories.
Time limitation and transaction specificity. The exemption is limited to stabilising actions “within 30 days from the date of issue of the Notes.” Practically, this means that stabilisation strategies must be planned and documented so that any exempt conduct is confined to the permitted period. Additionally, because the “Notes” definition is specific, the exemption cannot be relied upon for other issuances, other maturities, or other issuers—even if the trading behaviour is otherwise identical.
Counterparty limitation. The exemption is also limited by reference to counterparties. Stabilising actions must be taken with either a person under section 274 of the SFA or a sophisticated investor under section 275(2). For counsel, this creates a compliance checklist: the stabiliser must ensure that the relevant trades are executed with eligible counterparties and that records support that eligibility.
How Is This Legislation Structured?
The Regulations are short and comprise an enacting formula and three substantive sections:
- Section 1 (Citation and commencement): identifies the instrument and its effective date.
- Section 2 (Definitions): defines “Notes” and “stabilising action,” which are the two gatekeeping concepts for the exemption.
- Section 3 (Exemption): provides the conditional carve-out from the SFA’s sections 197 and 198 for stabilising actions meeting the defined criteria (time window, stabiliser, and eligible counterparties).
There are no additional parts or schedules in the extract provided, reflecting the Regulations’ purpose as a narrow, transaction-specific regulatory adjustment rather than a comprehensive market conduct code.
Who Does This Legislation Apply To?
Although the exemption is drafted as a legal carve-out from the SFA, it effectively applies to the stabilising activity undertaken by J.P. Morgan Securities Ltd. (and its related corporations) in relation to the defined Equitable PCI Bank, Inc. notes. In other words, the exemption is not a general permission for any market participant; it is tied to the stabiliser and the specific notes issuance.
In addition, the exemption is conditioned on the counterparty to the stabilising trades. The stabiliser must deal with either a person referred to in section 274 of the SFA or a sophisticated investor under section 275(2). Therefore, the practical compliance burden extends beyond the stabiliser’s internal policies to the execution and documentation of trades, including verification of counterparty status.
Why Is This Legislation Important?
This Regulations is important because it illustrates how Singapore’s market conduct framework balances two competing regulatory objectives: (1) preventing manipulative or disorderly trading practices and (2) allowing limited stabilisation to support orderly markets during the issuance period. By exempting stabilising actions from specific SFA provisions, MAS permits a controlled form of price support, but only when the conduct falls squarely within the defined boundaries.
For practitioners, the key significance lies in the precision of the exemption. The Regulations are not drafted in broad terms; they are anchored to a particular note issuance, a particular stabiliser, a particular type of conduct (buying or agreeing to buy), and a defined time window (30 days from issue). This precision reduces ambiguity but increases the need for careful factual and documentary alignment.
From an enforcement and risk perspective, reliance on the exemption requires counsel to confirm that all conditions are satisfied. If stabilising activity occurs outside the 30-day window, involves different notes, is undertaken by an entity not covered by the definition, or is executed with ineligible counterparties, the exemption may not apply. In such cases, the underlying SFA provisions (sections 197 and 198) would potentially apply, exposing the stabiliser and relevant persons to regulatory scrutiny.
Related Legislation
- Securities and Futures Act (Cap. 289) — including sections 197, 198, 274, 275(2), and the enabling provision in section 337(1)
- Futures Act (as referenced in the platform metadata)
- Stabilising Act (as referenced in the platform metadata)
- Legislation timeline / MAS legislative timeline (for version control and amendment history)
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.