Statute Details
- Title: Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Notes) Regulations 2006
- Act Code: SFA2001-S25-2006
- Type: Subsidiary Legislation (SL)
- Authorising Act: Securities and Futures Act (Cap. 289)
- Enacting Power: Section 337(1) of the Securities and Futures Act
- Commencement: 16 January 2006
- Legislation Number: SL 25/2006
- Status: Current version as at 27 March 2026 (per the legislation record)
- Key Provisions:
- Section 1: Citation and commencement
- Section 2: Definitions (including “Notes” and “stabilising action”)
- Section 3: Exemption from Sections 197 and 198 of the Securities and Futures Act for specified stabilising action
- Related Legislation (as indicated): Futures Act; Stabilising Act; Timeline; Authorising Act
What Is This Legislation About?
The Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Notes) Regulations 2006 (“Stabilising Action Exemption Regulations”) create a targeted exemption from certain market conduct rules under the Securities and Futures Act (the “SFA”). In plain terms, the Regulations allow specified market participants to take “stabilising action” in relation to a particular set of debt securities (“Notes”) during a defined period after issuance—without breaching the SFA provisions that would otherwise restrict or regulate such conduct.
Stabilisation is a common feature of securities issuance. When new securities are launched, their prices may be volatile. Stabilising actions—typically purchases (or offers to purchase) by an arranger or designated dealer—are intended to support orderly trading and reduce extreme price movements. However, stabilisation can overlap with conduct that market conduct laws treat as potentially manipulative. The Regulations therefore carve out a narrow safe harbour: stabilisation is permitted only if it fits the defined scope and conditions.
Importantly, this is not a general stabilisation regime for all securities. The Regulations are highly specific: they define the “Notes” by issuer, structure, maturity, and issuance size, and they define “stabilising action” by reference to a particular stabilising entity (J.P. Morgan Securities Ltd and its related corporations). The exemption is also time-limited (within 30 days from the date of issue). This makes the Regulations best understood as a bespoke exemption for a particular transaction or issuance programme.
What Are the Key Provisions?
Section 1 (Citation and commencement) provides the formal name of the Regulations and states that they came into operation on 16 January 2006. For practitioners, this matters when assessing whether stabilising activity occurred within the legal framework and whether any enforcement analysis depends on the effective date.
Section 2 (Definitions) is central because it determines the exact boundaries of the exemption. The Regulations define:
- “Notes” as the “5-year zero coupon resettable onward starting equity linked securities due January 2011” issued by Glenmark Pharmaceuticals Limited, with a principal amount of up to US$30 million.
- “securities” by reference to the SFA’s definition in section 239(1).
- “stabilising action” as 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.
From a legal risk perspective, the definitions are doing most of the work. If the instrument is not the defined “Notes,” or if the stabilising activity is not taken by J.P. Morgan Securities Ltd (or a related corporation), the exemption will not apply. Similarly, the purpose of the action must be stabilisation/price maintenance, not merely trading for investment or hedging unrelated to stabilisation (though in practice, stabilisation programmes may involve hedging mechanics—those would still need to fit the defined stabilising action concept).
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 the Notes within 30 days from the date of issue, provided the stabilising action is taken with respect to transactions involving any of the following categories:
- (a) an institutional investor;
- (b) a relevant person as defined in section 275(2) of the SFA; or
- (c) a person who acquires the Notes as principal, where the consideration for the acquisition 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.
Practically, Section 3 creates a conditional safe harbour. The exemption is triggered only when all of the following are satisfied:
- The activity qualifies as “stabilising action” under the definition (including the actor: J.P. Morgan Securities Ltd or related corporations).
- The stabilising action relates to the defined “Notes”.
- The stabilising action occurs within 30 days from the date of issue.
- The stabilising transactions are with one of the specified counterpart categories (institutional investors; relevant persons; or principal acquirers meeting the minimum consideration threshold).
- The minimum consideration threshold in paragraph (c) is met—at least $200,000 per transaction (or equivalent), including where consideration is exchanged in kind.
For counsel advising issuers, arrangers, or dealers, the threshold in paragraph (c) is particularly important. It prevents the exemption from being used for stabilisation involving smaller retail-type participation where the policy concern about market manipulation or unfair conduct is typically higher. The inclusion of “exchange of securities or other assets” also signals that the law looks at the economic value of consideration, not merely cash payments.
How Is This Legislation Structured?
The Regulations are structured in a simple, three-section format:
- Section 1 sets out the citation and commencement date.
- Section 2 provides definitions that delimit the scope of the exemption, including the specific “Notes” and the specific “stabilising action” actor.
- Section 3 contains the exemption itself, specifying that Sections 197 and 198 of the SFA do not apply to stabilising action meeting the defined conditions (instrument, actor, timing, and counterparty categories/consideration threshold).
There are no additional parts or schedules in the extract provided. The Regulations therefore function as a narrow legal instrument rather than a comprehensive market conduct code.
Who Does This Legislation Apply To?
Although the exemption is framed as an exemption from provisions of the SFA, its practical effect is to benefit specific participants engaged in stabilisation of the defined Notes. The definition of “stabilising action” identifies the relevant actor: J.P. Morgan Securities Ltd and its related corporations. Accordingly, the exemption is most relevant to those entities (and their compliance teams) when they conduct stabilisation activities.
However, Section 3 also imposes conditions based on who the stabilising transactions involve. The exemption applies only where stabilising action is taken in respect of the Notes with counterparties that are (i) institutional investors, (ii) relevant persons, or (iii) principal acquirers meeting the $200,000 minimum consideration threshold per transaction. This means that even if the stabiliser is the correct entity and the instrument and timing are correct, the exemption may fail if the stabilisation is carried out with counterparties outside those categories.
Why Is This Legislation Important?
This Regulations matters because it reconciles two competing policy objectives: (1) allowing stabilisation to support orderly markets during an issuance period, and (2) preventing stabilisation from becoming a vehicle for market manipulation or misleading trading. By exempting stabilising action from specific SFA provisions (Sections 197 and 198), the Regulations provide legal certainty for stabilisation programmes that otherwise might be treated as prohibited conduct.
For practitioners, the value is in the precision of the safe harbour. The Regulations are transaction-specific and actor-specific. That precision reduces ambiguity in compliance assessments: counsel can map the stabilisation programme against the defined “Notes,” confirm the stabiliser identity, verify the 30-day window, and ensure counterparties fall within the permitted categories and consideration thresholds.
From an enforcement and audit perspective, the exemption’s conditions create clear documentation points. A compliance file should typically include evidence of: the date of issue; the stabilisation period; the identity and corporate relationship of the stabilising entity; the nature of the Notes; and the classification of counterparties (institutional investor/relevant person/principal with minimum consideration). Where paragraph (c) is relied upon, the $200,000 per transaction threshold (including non-cash consideration) should be evidenced and valued appropriately.
Related Legislation
- Securities and Futures Act (Cap. 289) — in particular, Sections 197 and 198 (market conduct provisions from which the exemption applies), and Section 337(1) (power to make the Regulations); also Section 275(2) (definition of “relevant person”) and Section 239(1) (definition of “securities”).
- Futures Act — referenced in the legislation record as related legislation.
- Stabilising Act — referenced in the legislation record as related legislation.
Source Documents
This article provides an overview of the Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Notes) Regulations 2006 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the official text for authoritative provisions.