Statute Details
- Title: Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Preference Shares) (No. 2) Regulations 2006
- Act Code: SFA2001-S160-2006
- Legislation Type: Subsidiary Legislation (SL)
- Authorising Act: Securities and Futures Act (Cap. 289)
- Enacting Power: Section 337(1) of the Securities and Futures Act
- Commencement: 13 March 2006
- Regulation Number: SL 160/2006
- Status: Current version as at 27 March 2026
- Key Provisions: Regulation 1 (Citation and commencement); Regulation 2 (Definitions); Regulation 3 (Exemption)
- Regulatory Authority: Monetary Authority of Singapore (MAS)
- Signature: HENG SWEE KEAT, Managing Director, MAS (made 6 March 2006)
What Is This Legislation About?
The Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Preference Shares) (No. 2) Regulations 2006 (“Stabilising Action Exemption Regulations”) creates a targeted exemption from certain market conduct provisions in the Securities and Futures Act (the “SFA”) for stabilising activities involving a specific class of preference shares.
In plain language, the Regulations recognise that, in certain securities offerings, market participants may take steps to stabilise the trading price after issuance. Such stabilisation can reduce volatility and support orderly trading. However, stabilising conduct can also resemble prohibited market manipulation if it is not clearly carved out. This legislation therefore permits stabilising action—within strict limits—without triggering the relevant prohibitions in the SFA.
Importantly, the exemption is narrow and time-bound. It applies only to stabilising action taken within 30 days from the date of issue of the preference shares, and only in relation to specified counterparties (institutional investors, certain “relevant persons”, or principal acquirers meeting a minimum consideration threshold). The Regulations also define the “Preference Shares” precisely, tying the exemption to Non-Cumulative Perpetual Preferred Securities issued in March 2006 by Mizuho Capital Investment (EUR) 1 Limited.
What Are the Key Provisions?
Regulation 1 (Citation and commencement) provides the formal name of the Regulations and states that they came into operation on 13 March 2006. For practitioners, the commencement date matters because the exemption can only operate prospectively from that date (and, in any event, Regulation 3 imposes an additional 30-day window from the date of issue of the preference shares).
Regulation 2 (Definitions) is central to the scope of the exemption. It defines three key terms:
- “Preference Shares”: These are defined as the Non-Cumulative Perpetual Preferred Securities issued in March 2006 by Mizuho Capital Investment (EUR) 1 Limited, for a principal amount of up to EUR 2,000,000,000. This is a bespoke definition; it means the exemption is not a general stabilisation carve-out for all preference shares, but rather for a particular issuance.
- “securities”: This adopts the meaning in section 239(1) of the SFA, ensuring that the exemption is interpreted consistently with the SFA’s definitional framework.
- “stabilising action”: This 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 Preference Shares to stabilise or maintain the market price of the Preference Shares in Singapore or elsewhere. The definition is both actor-specific (J.P. Morgan and related corporations) and conduct-specific (buying or agreeing to buy, including offers to buy).
Regulation 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 Preference Shares within 30 days from the date of issue, provided the stabilising action is with certain categories of counterparties:
- (a) an institutional investor;
- (b) a “relevant person” as defined in section 275(2) of the SFA;
- (c) a person who acquires the Preference Shares as principal, where 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.
For legal practice, the key takeaways are:
- Exemption from specific prohibitions: The Regulations do not repeal or broadly amend the SFA. They simply provide that the SFA’s sections 197 and 198 do not apply to qualifying stabilising action.
- Time limitation: The stabilising action must occur within 30 days from the date of issue. This is a hard temporal boundary.
- Counterparty limitation: The exemption is conditional on the identity and status of the counterparty (institutional investor; relevant person; or principal acquirer meeting the minimum consideration threshold).
- Transaction value threshold: For principal acquirers, the consideration must be at least $200,000 per transaction (or equivalent). This threshold applies regardless of whether consideration is paid in cash or via exchange of securities or other assets.
Although the extract does not reproduce sections 197 and 198 of the SFA, the structure indicates that those provisions are the ones most likely to capture market conduct that could be characterised as improper trading or manipulation. The exemption therefore functions as a compliance “safe harbour” for stabilisation activity that fits the defined parameters.
How Is This Legislation Structured?
The Regulations are concise and consist of three provisions:
- Regulation 1 sets out the citation and commencement.
- Regulation 2 provides definitions for “Preference Shares”, “securities”, and “stabilising action”. These definitions are essential because they determine the scope of the exemption.
- Regulation 3 sets out the exemption from sections 197 and 198 of the SFA, including the 30-day limit and the qualifying counterparty categories and transaction value threshold.
There are no additional parts or schedules in the extract provided. The Regulations are therefore best understood as a targeted carve-out instrument rather than a comprehensive market conduct regime.
Who Does This Legislation Apply To?
In practical terms, the Regulations apply to stabilising action involving the defined Preference Shares, where the stabilising action is taken by J.P. Morgan Securities Ltd. or its related corporations. The exemption is thus primarily relevant to the stabilising agent and its corporate group, as well as to the counterparties with whom stabilising trades are executed.
However, the exemption’s conditional language also means that counterparties matter. Stabilising action must be taken with an institutional investor, a relevant person (under section 275(2) of the SFA), or a principal acquirer meeting the $200,000 per transaction minimum consideration requirement. Accordingly, lawyers advising issuers, underwriters, and trading desks must ensure that stabilisation documentation and trade confirmations reflect the counterparty status and transaction economics that bring the trades within the exemption.
Why Is This Legislation Important?
This Regulations is important because it addresses a recurring tension in securities regulation: stabilisation can be legitimate and beneficial for market functioning, but it can also be misconstrued as market manipulation. By carving out stabilising action from the SFA’s market conduct provisions, the Regulations provide legal certainty for stabilisation strategies that comply with defined boundaries.
For practitioners, the compliance value lies in the specificity of the exemption. The Regulations are not a general permission to stabilise; they are an exemption tied to:
- a particular issuance (Mizuho Capital Investment (EUR) 1 Limited, March 2006 preference shares);
- a particular stabilising actor (J.P. Morgan Securities Ltd. and related corporations);
- a particular conduct (buying or offering/agreement to buy to stabilise or maintain price);
- a particular time window (within 30 days from issue); and
- particular counterparties and transaction thresholds.
From an enforcement and risk perspective, this structure reduces ambiguity. If stabilising trades fall outside the defined parameters—e.g., trades occur after the 30-day period, are conducted by a different entity, relate to different securities, or are executed with counterparties that do not meet the institutional/relevant person/principal threshold—then the exemption would not apply, and the underlying SFA provisions (sections 197 and 198) could potentially be engaged.
Finally, the Regulations illustrate how Singapore’s market conduct framework can accommodate market practices through targeted exemptions made under the SFA’s enabling power (section 337(1)). This is useful context for lawyers assessing whether other stabilisation or market support measures may be permissible under similar exemption instruments.
Related Legislation
- Securities and Futures Act (Cap. 289) — particularly sections 197, 198, 239(1), 275(2), and the enabling power in section 337(1)
- Futures Act (as referenced in the provided metadata)
- Stabilising Act (as referenced in the provided metadata)
- Timeline (as referenced in the provided metadata)
Source Documents
This article provides an overview of the Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Preference Shares) (No. 2) Regulations 2006 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the official text for authoritative provisions.