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
- Legislative Type: Subsidiary Legislation (SL)
- Authorising Act: Securities and Futures Act (SFA), specifically section 337(1)
- Commencement: 13 March 2006
- Enacting Instrument Number: SL 160/2006
- Status: Current version as at 27 March 2026 (per provided extract)
- Key Provisions: Section 1 (citation and commencement), Section 2 (definitions), Section 3 (exemption)
- Regulatory Focus: Exemption from market conduct provisions for “stabilising action” relating to specified preference shares
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 (No. 2) Regulations”) creates a targeted exemption from certain market conduct rules in the Securities and Futures Act (the “Act”). In plain language, it allows specified market participants to take limited steps to support or stabilise the trading price of a particular class of securities—without those steps being treated as breaches of the Act’s general prohibitions.
Stabilisation is a common feature of securities issuance and trading. When new securities are issued, their prices can be volatile. Under market practice, stabilising transactions may be undertaken to reduce disorderly price movements and to help the market absorb the new supply. However, stabilisation can also resemble conduct that market conduct rules are designed to prevent—such as manipulative trading or improper price support. The Regulations therefore carve out a narrow exemption, but only for stabilising actions that meet strict conditions.
Crucially, this is not a general stabilisation regime for all securities. The Regulations are highly specific: they define “Preference Shares” as a particular issuance (Non-Cumulative Perpetual Preferred Securities issued in March 2006 by Mizuho Capital Investment (EUR) 1 Limited) and define “stabilising action” as actions taken by J.P. Morgan Securities Ltd. (or related corporations). The exemption is also time-limited (within 30 days from the date of issue) and transaction-size/eligibility-limited (institutional investors, relevant persons, or principal acquisitions above a specified minimum consideration).
What Are the Key Provisions?
Section 1 (Citation and commencement) provides the formal name of the Regulations and states that they come into operation on 13 March 2006. For practitioners, this matters because the exemption is only available for stabilising actions taken after commencement and within the time window specified in Section 3.
Section 2 (Definitions) sets the scope of the exemption by defining three key terms: “Preference Shares”, “securities”, and “stabilising action”. The definition of “Preference Shares” is highly particular. It refers to “Non-Cumulative Perpetual Preferred Securities” issued in March 2006 by Mizuho Capital Investment (EUR) 1 Limited, for a principal amount of up to EURO 2,000,000,000. This means the exemption is tied to that specific issuance and not to other preference shares or other issuers.
The definition of “stabilising action” is equally narrow. It covers actions taken in Singapore or elsewhere by J.P. Morgan Securities Ltd. or any of its related corporations. The action must involve buying, or offering or agreeing to buy, any of the Preference Shares in order to “stabilise or maintain the market price” of the Preference Shares in Singapore or elsewhere. This definition is important because it limits the exemption to stabilisation-oriented conduct by a specified firm (and its related corporations). If stabilisation is attempted by a different entity, or if the purpose is not stabilisation/price maintenance, the exemption would not apply.
Section 3 (Exemption) 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 Preference Shares, 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 Act; or
(c) a person who acquires the Preference Shares 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.
In practical terms, Section 3 creates a conditional “safe harbour” for stabilising transactions. The exemption is not blanket: it depends on (i) the security being the defined Preference Shares, (ii) the stabilising action being taken by the defined stabilising actor (per Section 2), (iii) the timing being within 30 days from issue, and (iv) the counterparty category and minimum consideration threshold being satisfied.
For lawyers advising issuers, underwriters, or trading desks, the counterparty conditions are often the most operationally challenging. The $200,000 threshold in particular requires careful documentation of transaction consideration and the form of payment (cash or exchange of securities/other assets). Where stabilisation is conducted through multiple trades, each trade must be assessed against the eligibility and consideration requirements.
How Is This Legislation Structured?
The Regulations are structured as a short instrument with three sections:
- Section 1: Citation and commencement (when the Regulations take effect).
- Section 2: Definitions that determine the scope of the exemption—especially the identity of the Preference Shares and the stabilising actor.
- Section 3: The exemption itself, specifying which Act provisions are disapplied and under what conditions (time, security, actor, and counterparty/consideration categories).
Notably, the Regulations do not set out detailed procedural requirements (such as reporting, limits on volume, or disclosure mechanics) within the extract provided. Instead, they operate as a narrow disapplication of specified Act sections, leaving the broader market conduct framework to apply outside the exemption.
Who Does This Legislation Apply To?
Although the exemption is drafted in terms of “stabilising action” and disapplication of Act provisions, its practical application is directed at market participants involved in stabilisation of the specified Preference Shares. The definition of “stabilising action” identifies the relevant stabilising actor: J.P. Morgan Securities Ltd. and its related corporations. Accordingly, the exemption is most relevant to those entities and their trading operations.
However, the exemption also depends on the counterparties to the stabilising transactions. Section 3 limits the exemption to stabilising actions conducted with institutional investors, relevant persons (as defined in the Act), or principal acquirers meeting the minimum consideration threshold. Therefore, the Regulations indirectly affect issuers, underwriters, and counterparties by shaping which trades can be executed under the exemption without triggering the Act’s market conduct prohibitions in Sections 197 and 198.
Why Is This Legislation Important?
This Regulations matters because it provides legal certainty for a specific stabilisation activity in a specific issuance. Without an exemption, stabilising trades could be scrutinised under the Act’s market conduct provisions. By disapplying Sections 197 and 198 for qualifying stabilising actions, the Regulations reduce the risk that legitimate market stabilisation is treated as unlawful manipulation.
From a compliance perspective, the Regulations illustrate how Singapore’s market conduct framework balances two competing objectives: (1) preventing market abuse and (2) allowing orderly market practices that support price formation during issuance. The narrow tailoring—specific securities, specific stabilising actor, a defined time window, and counterparty/consideration constraints—reflects a policy choice to permit stabilisation only where the risk of abuse is controlled.
For practitioners, the key takeaway is that the exemption is conditional and fact-specific. Advising on stabilisation requires confirming: (i) the securities fall within the defined “Preference Shares”; (ii) the stabilising action is taken by the defined entity (J.P. Morgan Securities Ltd. or related corporations); (iii) the trades occur within 30 days from the date of issue; and (iv) each trade is with an eligible counterparty category and meets the $200,000 minimum consideration requirement where applicable. These are the elements most likely to be tested in internal compliance reviews and, if relevant, in regulatory inquiries.
Related Legislation
- Securities and Futures Act (Cap. 289) — in particular Sections 197 and 198 (market conduct provisions disapplied by Section 3) and Section 337(1) (power to make these Regulations); also Section 275(2) (definition of “relevant person”).
- Futures Act — referenced in the provided metadata as related legislation (contextual, depending on the broader regulatory framework).
- Stabilising Act — referenced in the provided metadata (contextual; the Regulations themselves are made under the SFA).
- Timeline — referenced in the provided metadata as a navigation aid for versions and amendments.
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.