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 (No. S 25)
- Status: Current version as at 27 March 2026
- 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
What Is This Legislation About?
The Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Notes) Regulations 2006 (“Stabilising Exemption Regulations”) creates a targeted regulatory carve-out from certain market conduct rules in the Securities and Futures Act (the “SFA”). In plain terms, it allows specified market participants to take “stabilising action” in relation to a particular issuance of equity-linked notes without falling foul of the SFA’s general prohibitions on certain market manipulation or improper dealing practices.
The Regulations are narrow by design. They do not provide a general exemption for any stabilisation activity in any security. Instead, they define a specific set of “Notes” (issued by Glenmark Pharmaceuticals Limited) and a specific category of stabilising conduct (actions taken by J.P. Morgan Securities Ltd or its related corporations). They also limit the exemption to stabilising action taken within a defined time window—30 days from the date of issue of the Notes—and to dealings with specified types of counterparties.
From a practitioner’s perspective, the key value of the Regulations is compliance certainty. Stabilisation strategies are common in capital markets to reduce price volatility immediately after issuance. However, stabilisation can resemble prohibited conduct if not carefully structured. These Regulations provide a statutory safe harbour—albeit a limited one—so that eligible stabilisation activity can proceed while maintaining the integrity of Singapore’s market conduct framework.
What Are the Key Provisions?
Section 1 (Citation and commencement) is straightforward. It provides the short title and confirms that the Regulations came into operation on 16 January 2006. For legal work, this matters mainly for determining whether stabilising actions taken around the issuance period fall within the regulatory regime.
Section 2 (Definitions) is the heart of the Regulations because it tightly constrains the scope of the exemption. Three defined terms are particularly important:
(i) “Notes” are defined with unusual specificity: they are “the 5-year zero coupon resettable onward starting equity linked securities due January 2011 issued by Glenmark Pharmaceuticals Limited for a principal amount of up to US$30 million.” This means the exemption is tied to a particular product and issuer, not merely to the general concept of “notes” or “equity-linked securities.” A practitioner should treat this as a product-level limitation: if the security is not the defined Notes, the exemption likely does not apply.
(ii) “securities” adopts the meaning in section 239(1) of the SFA. This ensures that the exemption operates within the SFA’s established definitional framework for securities.
(iii) “stabilising action” is defined 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. This definition is crucial for two reasons: (1) it identifies the permitted stabiliser (J.P. Morgan Securities Ltd and related corporations), and (2) it requires a stabilisation purpose—maintaining or stabilising price—rather than ordinary trading or hedging for other reasons.
Section 3 (Exemption) provides the operative relief. 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 one of the following categories of counterparties:
(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, but only if 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 does two things. First, it creates a time-limited safe harbour (30 days from issue). Second, it restricts the exemption to dealings with sufficiently “sophisticated” or high-value counterparties. The $200,000 threshold in paragraph (c) is particularly important for structuring: if the stabiliser deals with a principal acquirer below the threshold, the exemption would not apply, and the stabilising conduct could be exposed to the SFA’s general prohibitions under Sections 197 and 198.
Although the extract does not reproduce Sections 197 and 198 themselves, the legislative technique is clear: the Regulations suspend the application of those provisions for eligible stabilising action. For counsel, the immediate task is to map the stabilisation plan against the exemption’s conditions—security identity, stabiliser identity, timing, purpose, and counterparty category/value.
How Is This Legislation Structured?
The Regulations are extremely compact and consist of an enacting formula followed by three substantive provisions:
Section 1 sets out the citation and commencement date.
Section 2 provides definitions that determine the scope of the exemption, including the precise identity of the “Notes” and the definition of “stabilising action.”
Section 3 contains the exemption itself, specifying that Sections 197 and 198 of the SFA do not apply to qualifying stabilising action within the 30-day post-issue window and only in specified dealing circumstances.
There are no additional parts, schedules, reporting requirements, or procedural steps in the extract. This suggests the Regulations operate as a direct statutory carve-out rather than a detailed regulatory regime with ongoing obligations.
Who Does This Legislation Apply To?
The exemption is directed at stabilising action taken by J.P. Morgan Securities Ltd or its related corporations. Accordingly, the primary regulated party is the stabilising entity. However, the exemption also depends on the counterparty to the stabilising transactions. Therefore, the Regulations indirectly affect other market participants—such as institutional investors, “relevant persons,” and principal acquirers—because the exemption’s availability depends on the category and (in one case) the transaction value.
In addition, the exemption is product-specific. It applies only to stabilising action in respect of the defined Glenmark Pharmaceuticals Limited equity-linked notes (5-year zero coupon resettable onward starting equity linked securities due January 2011) up to the specified principal amount. If a stabiliser trades a different tranche, a different maturity, a different issuer, or a different structure, the statutory definition of “Notes” would likely not be satisfied, and the exemption would not apply.
Why Is This Legislation Important?
Stabilisation activity sits at the intersection of market liquidity objectives and market integrity concerns. Without a safe harbour, stabilisation could be characterised as improper dealing or market manipulation, particularly where purchases are made to influence or support price. The Stabilising Exemption Regulations provide a targeted mechanism to permit stabilisation in a controlled manner, thereby supporting orderly capital markets while preserving the enforcement framework for conduct that falls outside the exemption.
For practitioners, the Regulations are important because they offer a compliance checklist for stabilisation transactions. A lawyer advising an arranger, dealer, or stabilising agent should verify at least the following:
(1) Security match: Are the instruments exactly the “Notes” as defined?
(2) Actor match: Is the stabiliser J.P. Morgan Securities Ltd or a related corporation?
(3) Purpose and conduct: Is the activity genuinely “to stabilise or maintain” market price, and does it involve buying (or offering/agreement to buy) the Notes?
(4) Timing: Is the stabilising action within 30 days from the date of issue?
(5) Counterparty eligibility: Is the counterparty an institutional investor, a “relevant person,” or a principal acquirer meeting the $200,000 threshold (or equivalent) per transaction?
From an enforcement perspective, the exemption’s narrowness means that deviations—such as dealing with an ineligible counterparty, trading outside the 30-day window, or stabilising a non-defined security—could expose parties to the full force of Sections 197 and 198 of the SFA. Therefore, the Regulations are not merely permissive; they delineate the boundary between lawful stabilisation and potentially prohibited market conduct.
Related Legislation
- Securities and Futures Act (Cap. 289) — in particular Sections 197 and 198 (market conduct provisions), and sections 239(1) and 275(2) (definitions relevant to the Regulations)
- Futures Act (referenced in the metadata context)
- Stabilising Act (referenced in the metadata context)
- Legislation Timeline / Authorising Act (for version control and commencement 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) Regulations 2006 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the official text for authoritative provisions.