Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Preference Shares) (No. 2) Regulations 2008

Statute Details

• Title: Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Preference Shares) (No. 2) Regulations 2008
• Act Code: SFA2001-S359-2008
• Type: Subsidiary legislation (SL)
• Authorising Act: Securities and Futures Act (Cap. 289) — made under section 337(1)
• Commencement: 11 July 2008
• Status: Current version as at 27 March 2026
• Key Provisions (from extract): Section 2 (definitions); Section 3 (exemption)
• Legislative Focus: Exemption from specified market conduct provisions for stabilising action relating to a defined preference share offer

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 2008 (“Stabilising Action (Preference Shares) Regulations”) creates a targeted regulatory pathway that permits certain market participants to conduct “stabilising action” in connection with a specific preference share offer without breaching specified market conduct rules in the Securities and Futures Act (the “SFA”).

In plain terms, stabilisation is a controlled practice used around the time of a securities offering to help maintain orderly trading and reduce excessive price volatility. The Regulations recognise that stabilisation can be legitimate when conducted within strict limits and disclosure requirements. However, because stabilisation can also be misused to create an artificial market, the Regulations impose detailed conditions and procedural safeguards.

Although the Regulations are short, they are highly prescriptive. They define the relevant instruments (the “preference shares”), the actors (the “stabilising manager” and “dealer”), the permitted stabilisation conduct, and the timing and quantitative limits. The exemption is not general; it applies only to stabilising action undertaken for the defined offer and only if all conditions are met.

What Are the Key Provisions?

1. Definitions (Section 2)

The Regulations contain a set of definitions that anchor the exemption. Several are particularly important for practitioners:

• “Preference shares” are specifically defined as Series B non-cumulative perpetual preferred securities issued in July 2008 by SMFG Preferred Capital USD 3 Limited for a principal amount of up to US$3,000,000,000. This makes the exemption offer-specific rather than broadly applicable to all preference share issuances.
• “Stabilising action” means actions taken in Singapore or elsewhere by the stabilising manager (or a dealer on its behalf) to buy, or offer or agree to buy, preference shares in order to stabilise or maintain the market price of the preference shares in Singapore or elsewhere.
• “Stabilising manager” is defined as Goldman Sachs International or any of its related corporations. This is a narrow category; the exemption is tied to that stabilising manager structure.
• “Offer” and “offer document” are defined by reference to an offer for subscription or purchase of the preference shares in conjunction with the listing on a securities exchange.
• “Over-allotment” is defined as allotment or sale of shares in excess of the number available under the offer.

2. The exemption from specified SFA provisions (Section 3(1))

The core operative provision is Section 3(1), which states that Sections 197, 198, 218(2) and 219(2) of the SFA shall not apply to stabilising action taken in respect of the defined offer, provided that the conditions in paragraphs (3) to (14) are complied with.

For lawyers, the practical significance is that the exemption is a “carve-out” from market conduct prohibitions that would otherwise apply to conduct that may be characterised as manipulative or otherwise improper. The exemption is conditional: if any condition fails, the stabilising conduct may fall back within the scope of the SFA provisions.

3. When the exemption applies: quantitative, disclosure and timing triggers (Section 3(2))

Section 3(2) sets out the circumstances under which stabilising action is “in respect of an offer” that qualifies for the exemption. The key requirements include:

• Minimum offer size: the total value of the preference shares being offered (based on the offer price) must be not less than S$25 million (or equivalent).
• Maximum stabilisation purchases: the stabilising manager’s purchases for stabilising action must not exceed 20% of the total number of preference shares being offered prior to any over-allotment (if applicable).
• Offer document disclosure: the offer document must state (i) that stabilising action may be taken; (ii) the maximum period during which it may be taken; (iii) the number of preference shares subject to any over-allotment option; and (iv) the maximum number the stabilising manager may buy, capped by the 20% limit.
• Public announcement disclosure via the exchange: a public announcement must be made through the relevant securities exchange on the business day immediately following the closing date of the offer, containing the same categories of information as the offer document.
• Cash terms and specific price: the offer must be on cash terms and made (or to be made) at a specific price payable in any currency.

4. Substantive conduct limits: “not false or misleading” and “no premature/late stabilisation” (Sections 3(3)–(6))

The Regulations then impose behavioural and temporal constraints:

• Reasonable satisfaction regarding price integrity (Section 3(3)): the stabilising manager must take stabilising action only after being reasonably satisfied that the price is not false or misleading. It must also continue stabilisation only while reasonably satisfied that the price has not become false or misleading, except where the only reason is the stabilising action itself.
• No stabilisation before the earliest public announcement of the offer price (Section 3(4)): stabilising action cannot begin before the date of the earliest public announcement of the offer price made through the relevant exchange.
• Hard stop dates (Section 3(5)): stabilising action must not be taken after the earlier of:
  • the expiry of 30 calendar days from the date of commencement of trading on the exchange; or
  • the expiry of 60 calendar days from the date of the earliest public announcement of the offer price through the exchange; or
  • the date on which the stabilising manager has bought the maximum number of preference shares permitted under the offer document.

5. Trading restrictions and permitted exceptions (Sections 3(6)–(7))

Section 3(6) provides a general prohibition: the stabilising manager must not effect or cause to be effected any sell order of the preference shares prior to the date of commencement of each stabilising action or during the period when stabilising is permitted.

Section 3(7) then clarifies that this prohibition does not prevent:

• the stabilising manager (or);
• an associate of the stabilising manager (in the associate’s capacity as a dealer),

from executing sell orders for persons who are not associates of the issuer, or selling preference shares on behalf of the issuer as part of the offer (including under underwriting commitments). This is a practical carve-out to allow ordinary market or underwriting-related selling while still restricting stabilisation-related selling that could undermine the stabilising purpose or create misleading trading patterns.

6. Record-keeping and inspection (Sections 3(8)–(10))

Section 3(8) requires the stabilising manager to:

• keep a register in the form required by the listing securities exchange; and
• record particulars of each stabilisation-related buy transaction (price, quantity, and dealer name) before the end of the day of the transaction.

Section 3(9) addresses registers kept in Singapore: they must be made available for inspection by the Authority or the exchange within the time stipulated. Section 3(10) addresses registers kept outside Singapore: they must be capable of being brought into Singapore and made available for inspection within the stipulated time, or otherwise comply with the inspection availability requirement (the extract truncates the remainder, but the intent is clear—regulators must be able to inspect the stabilisation records).

Note on the truncated extract: The provided text cuts off within Section 3(10). In a full practitioner review, counsel should obtain the complete text of paragraphs (10) through (14) to confirm additional procedural requirements (for example, further record retention, reporting, or additional restrictions). The exemption is expressly “subject to paragraphs (3) to (14) being complied with”, so missing any later condition could be decisive.

How Is This Legislation Structured?

The Regulations are structured as a short instrument with three main provisions:

• Section 1 sets out the citation and commencement date (11 July 2008).
• Section 2 provides definitions that determine the scope of the exemption (including the specific preference shares and the stabilising manager).
• Section 3 contains the exemption mechanism, including:
  • the carve-out from specified SFA market conduct sections;
  • the conditions for the exemption to apply (size, caps, disclosures, announcements);
  • substantive trading and timing restrictions;
  • record-keeping and inspection obligations.

Who Does This Legislation Apply To?

In practical terms, the Regulations apply to the stabilising manager (Goldman Sachs International and its related corporations) and any dealer acting on its behalf. The exemption is also relevant to the issuer and to the offer process because the offer document and exchange announcements must contain specific stabilisation disclosures.

Because the definition of “preference shares” is tied to a particular July 2008 issuance by SMFG Preferred Capital USD 3 Limited, the exemption is not a general stabilisation regime for all preference share offerings. It is best understood as a bespoke regulatory permission for a particular transaction structure, with conditions designed to ensure transparency and limit stabilisation to a controlled range.

Why Is This Legislation Important?

This Regulations matters because stabilisation sits at the intersection of market liquidity support and market integrity. Without a carefully drafted exemption, stabilising purchases could be argued to fall within statutory prohibitions on market conduct—potentially exposing the stabilising manager and related dealers to regulatory action or enforcement risk.

For practitioners, the key importance is the conditional nature of the exemption. Compliance is not merely procedural; it includes substantive requirements (reasonable satisfaction that prices are not false or misleading), strict timing windows, and quantitative caps (20% of the pre-over-allotment offer size). The disclosure and announcement requirements also create an evidentiary record that regulators and exchanges can use to assess whether stabilisation was properly authorised and communicated to the market.

Finally, the record-keeping and inspection provisions underline that regulators expect traceability. Stabilisation is permitted only if the stabilising manager can produce transaction-level records promptly for inspection by the Authority or the exchange. In deal execution, counsel should therefore ensure that operational teams, dealing desks, and compliance functions can meet the register format, timing, and availability requirements.

Related Legislation

• Securities and Futures Act (Cap. 289) — particularly Sections 197, 198, 218(2) and 219(2) (the provisions exempted for qualifying stabilising action)
• Futures Act (referenced in the platform metadata)
• Stabilising Act (referenced in the platform metadata)
• Timeline (legislation timeline reference for version verification)

Source Documents

• Official Text — Singapore Statutes Online
• Archived Copy — Litt Law CDN

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 2008 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the official text for authoritative provisions.