Statute Details
- Title: Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Preference Shares) (No. 4) Regulations 2006
- Legislation Type: Subsidiary legislation (SL)
- Act Code: SFA2001-S171-2006
- Authorising Act: Securities and Futures Act (Cap. 289) (“SFA”)
- Enacting Authority: Monetary Authority of Singapore (MAS)
- Enacting Power: Section 337(1) of the SFA
- Citation and Commencement: 23 March 2006
- Key Provisions: Section 2 (definitions); Section 3 (exemption)
- Status: Current version (as at 27 March 2026)
What Is This Legislation About?
The Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Preference Shares) (No. 4) Regulations 2006 (“Regulations”) is a targeted regulatory instrument that creates a limited exemption from certain market conduct rules under the Securities and Futures Act. In practical terms, it allows specified persons to take “stabilising action” in relation to a particular issuance of preference shares without the usual statutory restrictions applying.
Stabilising action is a well-known feature of certain capital markets transactions. It generally refers to activities intended to support or maintain the market price of a security during a period when trading may be volatile—typically around the time of issuance or distribution. However, because stabilisation can resemble market manipulation, securities regulators impose market conduct rules that restrict or prohibit conduct that could mislead investors or distort price formation.
These Regulations carve out a narrow exception. They do not broadly legalise stabilisation for all securities or all circumstances. Instead, they define a specific class of securities (the “Preference Shares” issued in March 2006 by Shinsei Finance II (Cayman) Limited) and a specific type of stabilisation (actions by Morgan Stanley & Co. International Limited or its related corporations). The exemption is also time-limited (within 30 days from the date of issue) and conditional (including minimum consideration thresholds for certain categories of participants).
What Are the Key Provisions?
1. Citation and commencement (Regulation 1)
Regulation 1 provides the short title and states that the Regulations came into operation on 23 March 2006. This matters for practitioners because the exemption is tied to the issuance timeline and the statutory framework that applies to market conduct at the relevant time.
2. Definitions (Regulation 2)
Regulation 2 is central because it precisely identifies the scope of the exemption. It defines:
- “Preference Shares”: the US$ Non-Cumulative Perpetual Preferred Securities issued in March 2006 by Shinsei Finance II (Cayman) Limited, for a principal amount of up to US$1,000,000,000.
- “securities”: this adopts the meaning in section 239(1) of the SFA, ensuring that the exemption operates within the SFA’s defined universe of “securities”.
- “stabilising action”: an action taken in Singapore or elsewhere by Morgan Stanley & Co. International Limited (or any of its related corporations) to buy, or to offer or agree to buy, any of the Preference Shares in order to stabilise or maintain the market price of the Preference Shares in Singapore or elsewhere.
For legal analysis, the definition is both person-specific and purpose-specific. It is not enough that a party buys the relevant shares; the action must be taken by the defined stabilising actor (Morgan Stanley & Co. International Limited or related corporations) and must be directed to stabilising or maintaining market price.
3. The exemption from sections 197 and 198 of the SFA (Regulation 3)
The operative provision is Regulation 3. 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.
Although the extract does not reproduce sections 197 and 198, the legal effect is clear: the Regulations suspend the application of those market conduct prohibitions/restrictions for the specified stabilising activity. In practice, this enables stabilisation trades that might otherwise fall within the prohibitions in the SFA.
4. Who may take the stabilising action (Regulation 3(a)–(c))
Regulation 3 limits the exemption to stabilising action taken by or involving certain categories of persons:
- (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, provided that 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.
This structure is important for compliance. It means that the exemption is not automatically available to any market participant. The stabilising activity must be undertaken within the regulatory categories recognised by the SFA framework. For the “principal” acquisition route, the Regulations add a minimum consideration threshold—a quantitative gatekeeping condition that reduces the risk of small-lot trading being used to mimic stabilisation.
5. Time limitation (Regulation 3)
The exemption applies only to stabilising action within 30 days from the date of issue of the Preference Shares. This is a classic stabilisation window. Practitioners should treat this as a hard boundary: stabilisation outside the window would not benefit from the exemption and could trigger the underlying prohibitions in sections 197 and 198.
6. Formal making and signature
The Regulations were made on 20 March 2006 by Heng Swee Keat, Managing Director of MAS. While not usually contentious, the making date can matter when assessing whether the instrument was in force at the relevant time for a transaction or for any regulatory reporting obligations.
How Is This Legislation Structured?
These Regulations are concise and consist of:
- Regulation 1: Citation and commencement.
- Regulation 2: Definitions, including the specific identification of the Preference Shares and the definition of stabilising action.
- Regulation 3: The exemption—disapplying sections 197 and 198 of the SFA for stabilising action in respect of the defined Preference Shares, within a specified period, and subject to the categories of persons and consideration threshold.
From a practitioner’s perspective, the Regulations function as a transaction-specific carve-out. There are no separate schedules, reporting requirements, or procedural steps in the extract provided. The legal work therefore focuses on mapping the facts of a stabilisation programme onto the defined elements in Regulation 2 and the conditions in Regulation 3.
Who Does This Legislation Apply To?
The exemption is directed at stabilising action relating to a particular issuance of preference shares. It applies to stabilising actions taken by Morgan Stanley & Co. International Limited (or its related corporations) as defined in Regulation 2, and only insofar as those actions are taken in Singapore or elsewhere to stabilise or maintain the market price of the defined Preference Shares.
However, Regulation 3 further restricts the exemption to stabilising action involving certain categories of participants: institutional investors, relevant persons (as defined in section 275(2) of the SFA), or persons acquiring as principal meeting the $200,000 per transaction minimum consideration threshold. Accordingly, the exemption is not a blanket permission for any dealer or investor; it is conditional on both who is involved and how the acquisition is structured.
Why Is This Legislation Important?
This Regulations is important because it demonstrates how Singapore’s market conduct regime balances two competing policy goals: (1) preventing market manipulation and misleading price signals, and (2) allowing legitimate market stabilisation practices in connection with securities offerings. By disapplying sections 197 and 198 of the SFA for a defined stabilisation window and defined instruments, MAS provides legal certainty for participants who structure stabilisation programmes in compliance with the exemption.
For practitioners, the key value lies in risk allocation and compliance planning. Stabilisation activity can be sensitive. Without an exemption, stabilising trades might be characterised as prohibited conduct under the SFA. With the exemption, parties can design trading and documentation processes to fit within the statutory carve-out—particularly the 30-day limit, the defined issuer/security, the defined stabilising actor, and the minimum consideration threshold for principal acquisitions.
Finally, because the Regulations are specific to a particular issuance (Shinsei Finance II (Cayman) Limited’s March 2006 preference securities), they also serve as a reminder that stabilisation exemptions in Singapore are often instrument- and transaction-specific. Lawyers should therefore avoid assuming that stabilisation permissions granted for one offering automatically extend to other issuances, other security types, or other stabilising firms.
Related Legislation
- Securities and Futures Act (Cap. 289) — in particular, sections 197, 198, 239(1), 275(2), and the regulation-making power in 337(1).
- Futures Act (referenced in the provided metadata as part of the broader regulatory context).
- Stabilising Act (referenced in the provided metadata as part of the broader regulatory context).
- Timeline (legislation timeline tool for confirming the correct version as at the relevant date).
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. 4) Regulations 2006 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the official text for authoritative provisions.