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)
- Power Used: Section 337(1) of the Securities and Futures Act
- Commencement: 11 July 2008
- Key Provisions (from extract): Section 2 (definitions); Section 3 (exemption)
- Status (as provided): Current version as at 27 Mar 2026
- Legislative Focus: Exemption from specified market conduct provisions for stabilising actions 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 (No. 2) Regulations”) creates a targeted regulatory carve-out that permits certain “stabilising actions” in connection with a specific preference share offer. In plain language, the Regulations recognise that, in some capital markets transactions, market makers or stabilising managers may buy (or arrange to buy) securities shortly after issuance to help maintain orderly trading and reduce volatility. However, such activity can otherwise fall foul of general market conduct rules designed to prevent manipulation.
Accordingly, the Regulations exempt stabilising action from the application of particular provisions of the Securities and Futures Act (“SFA”), but only if strict conditions are met. The exemption is not a general permission for any stabilisation activity in any context; it is tightly linked to a defined class of securities and an offer framework, including disclosure, limits on size, timing restrictions, and record-keeping/inspection obligations.
Practically, the Regulations are best understood as a compliance “safe harbour” for stabilisation in a particular deal: if the stabilising manager and its dealers follow the prescribed steps, the relevant SFA market conduct provisions will not apply to that stabilising action. If they do not, the exemption will not protect them, and the general prohibitions on market misconduct may apply.
What Are the Key Provisions?
1. Definitions that control the scope of the exemption (Section 2). The Regulations define key terms that determine who may act and what conduct is covered. Notably:
“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 expressly identified as Goldman Sachs International or any of its related corporations.
“preference shares” are defined with high specificity: “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.
“offer” and “offer document” are also defined in relation to offers for subscription or purchase of the preference shares in conjunction with listing on a securities exchange.
These definitions are essential for practitioners: they show that the exemption is deal-specific and participant-specific. If the securities are not the defined preference shares, or the actor is not the defined stabilising manager (or its permitted dealer agents), the exemption is unlikely to be available.
2. The exemption from specified SFA provisions (Section 3(1)). Section 3(1) provides that Sections 197, 198, 218(2) and 219(2) of the SFA shall not apply to stabilising action taken in respect of an offer of the defined preference shares, provided the conditions in paragraphs (3) to (14) are complied with.
While the extract does not reproduce the text of the referenced SFA sections, the structure indicates that those provisions are part of the SFA’s market conduct framework (typically dealing with prohibitions on market manipulation, false or misleading conduct, or related misconduct). The Regulations therefore operate as a conditional exemption: the stabilising manager can engage in stabilising purchases without breaching those SFA provisions, but only within the boundaries set out in the Regulations.
3. Conditions for the exemption to apply (Section 3(2)). Section 3(2) sets out the substantive eligibility requirements for the offer and the disclosure/publicity that must accompany it. The stabilising action must be in respect of an offer where, among other things:
- Minimum offer size: the total value of the preference shares offered (based on the offer price) is not less than $25 million (or equivalent in foreign currency).
- Cap on stabilising purchases: the total number of preference shares the stabilising manager buys 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 that stabilising action may be taken, the maximum period during which it may be taken, the over-allotment option details (if applicable), and the maximum number of shares the stabilising manager may buy (bounded by the 20% cap).
- Public announcement disclosure: a public announcement must be made through the securities exchange on the business day immediately following the closing date of the offer, containing the same categories of information as in the offer document.
- Cash terms and fixed price: the offer must be on cash terms and made (or to be made) at a specific price payable in any currency.
For practitioners, these conditions are the “front-end” compliance gate. If the disclosure is incomplete, if the timing of announcements is wrong, or if the stabilising manager exceeds the numerical cap, the exemption may fail even if the stabilising trades were otherwise “reasonable” or “orderly”.
4. Conduct and timing restrictions (Sections 3(3) to (7)). The Regulations then impose behavioural constraints:
- Reasonable satisfaction re false/misleading price (Section 3(3)): the stabilising manager must take stabilising action only after being reasonably satisfied that the price is not false or misleading; and must continue only if reasonably satisfied that the price has not become false or misleading, other than due to stabilising action itself.
- No stabilisation before earliest offer price announcement (Section 3(4)): stabilising action cannot be taken before the date on which the earliest public announcement of the offer stating the offer price is made through the relevant exchange.
- Hard stop dates (Section 3(5)): stabilising action must cease on the earlier of:Additionally, stabilising action must stop if the stabilising manager has bought the maximum number of shares it is permitted to buy under the offer document.
- expiry of 30 calendar days from commencement of trading of the preference shares on the exchange; or
- expiry of 60 calendar days from the date of the earliest public announcement stating the offer price.
Sell order restriction (Section 3(6) and exception in Section 3(7)). 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 permitted stabilisation period. However, Section 3(7) provides a limited carve-out: it does not prohibit the stabilising manager (or an associate acting as a dealer) from executing sell orders for persons who are not associates of the issuer, or selling the preference shares on behalf of the issuer as part of the offer (including pursuant to underwriting commitments). This is designed to prevent stabilisation from being paired with sales that could undermine the purpose of maintaining orderly price formation.
5. Record-keeping and inspection (Sections 3(8) to (10) and beyond). The Regulations require the stabilising manager to maintain a register of stabilising transactions. Specifically, Section 3(8) requires:
- a register in the form required by the securities exchange; and
- recording particulars of each transaction to buy the preference shares entered into in connection with stabilising action, including price, quantity, and name of the dealer, 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 relevant securities 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—if not capable—must comply with alternative arrangements (the extract truncates the remainder, but the compliance intent is clear: regulators must be able to inspect the stabilisation record).
Note on the truncated extract: The provided text stops mid-sentence in Section 3(10)(b). In a full practitioner review, counsel should obtain the complete Regulations to confirm any further requirements (for example, additional reporting, further restrictions on communications, or detailed inspection mechanics). Even where the extract is incomplete, the visible provisions already show the core compliance architecture: eligibility, disclosure, limits, timing, trade restrictions, and auditability.
How Is This Legislation Structured?
The Regulations are short and structured as follows:
- Section 1 (Citation and commencement): provides the short title and states that the Regulations come into operation on 11 July 2008.
- Section 2 (Definitions): sets out the key terms used throughout, including the deal-specific definition of the preference shares and the participant-specific definition of the stabilising manager.
- Section 3 (Exemption): contains the operative exemption and the detailed conditions. It is subdivided into paragraphs (1) to (14) (as indicated by the extract), covering:
- the scope of the exemption from specified SFA provisions;
- eligibility conditions tied to offer size, caps, and disclosure;
- behavioural requirements (false/misleading price safeguards);
- timing restrictions (no stabilisation before the offer price announcement and hard stop dates);
- trade restrictions (no sell orders during stabilisation, subject to narrow exceptions); and
- 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 to dealers acting on its behalf (including persons licensed/regulated in foreign jurisdictions as “dealers” under the definition). The exemption is triggered only when stabilising action is taken in respect of the defined Series B non-cumulative perpetual preferred securities issued by SMFG Preferred Capital USD 3 Limited and offered in conjunction with listing on a securities exchange.
Other market participants—such as issuers, underwriters, or investors—are not directly “regulated” by the exemption mechanism in the same way, but they are indirectly affected because the offer document and public announcements must include stabilisation disclosures. If the issuer and its advisers fail to include the required disclosure, the stabilising manager may be unable to rely on the exemption.
Why Is This Legislation Important?
This Regulations is important because it balances two competing regulatory objectives: (1) allowing stabilisation to support orderly trading in certain offerings, and (2) preventing stabilisation from becoming a vehicle for market manipulation. By exempting specified SFA provisions only when strict conditions are satisfied, the Regulations create a controlled environment in which stabilisation can occur without undermining market integrity.
For practitioners, the key value lies in the compliance checklist. The exemption is conditional on measurable and documentable requirements: minimum offer value, a hard numerical cap (20%), required disclosures in both the offer document and exchange announcements, and strict timing windows (no earlier than the offer price announcement; no later than the earlier of 30/60 day stop dates or the maximum purchase limit). In addition, the stabilising manager must maintain a transaction register capable of inspection by the Authority or the exchange. These are precisely the elements that regulators and auditors will look for when assessing whether stabilisation was legitimate.
Finally, because the stabilising manager is explicitly named and the preference shares are specifically identified, counsel should treat this as a deal-specific regulatory instrument rather than a general stabilisation regime. Where a different issuer or security is involved, different regulations or guidance may apply, and reliance on this exemption would be inappropriate.
Related Legislation
- Securities and Futures Act (Cap. 289) (including the market conduct provisions referenced in Section 3(1))
- Futures Act (as referenced in the provided metadata)
- Stabilising Act (as referenced in the provided metadata)
- Timeline (legislative timeline reference for version control)
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 2008 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the official text for authoritative provisions.