Statute Details
- Title: Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Preference Shares) Regulations 2006
- Act Code: SFA2001-S117-2006
- Type: Subsidiary Legislation (SL)
- Authorising Act: Securities and Futures Act (Cap. 289)
- Enacting Power: Section 337(1) of the Securities and Futures Act
- Commencement: 27 February 2006
- Legislative Status: Current version as at 27 March 2026 (per the provided extract)
- Regulation Structure: Regulations 1 to 3 (short-form, targeted instrument)
- Key Provisions: Regulation 2 (definitions); Regulation 3 (exemption from Sections 197 and 198 of the Act)
- Regulatory Authority: Monetary Authority of Singapore (MAS)
What Is This Legislation About?
The Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Preference Shares) Regulations 2006 is a narrowly tailored regulatory instrument. In essence, it creates a specific exemption from certain market conduct rules in the Securities and Futures Act (the “SFA”) for stabilising activities carried out in relation to a particular issuance of preference shares.
Stabilising action is a common feature of certain capital markets transactions. When a new issue is launched, market prices can be volatile. Under regulated frameworks, stabilising purchases (or offers to buy) may be permitted for a limited time to help maintain orderly trading conditions. However, stabilising activity can also resemble conduct that market conduct rules are designed to prevent—such as manipulation or misleading price formation. This is why the SFA contains provisions restricting particular dealing practices.
This Regulations’ purpose is therefore pragmatic: it allows stabilising action to occur without triggering the prohibitions in Sections 197 and 198 of the SFA, but only for a defined set of participants, only for a defined product, and only within a defined time window after issuance. The exemption is not general; it is tied to the specific “US$ Step-Up Non-Cumulative Perpetual Preferred Securities” issued in February 2006 by Shinsei Finance (Cayman) Limited.
What Are the Key Provisions?
Regulation 1 (Citation and commencement) provides the short title and confirms that the Regulations came into operation on 27 February 2006. For practitioners, this matters because the exemption is time-bound and must be applied with precision to the relevant issuance and dealing period.
Regulation 2 (Definitions) is central because it determines the scope of the exemption. Three defined terms are particularly important:
(1) “Preference Shares” are defined very specifically as the US$ Step-Up Non-Cumulative Perpetual Preferred Securities issued in February 2006 by Shinsei Finance (Cayman) Limited for a principal amount of up to US$1,000,000,000. This specificity indicates that the exemption is transaction-specific and product-specific, not a generic exemption for any preference shares.
(2) “securities” adopts the meaning in section 239(1) of the SFA. This is a standard legislative technique to avoid redefining broad statutory concepts and ensures consistency with the SFA’s definitions.
(3) “stabilising action” is defined as 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. This definition is also restrictive: it identifies the stabilising party (Morgan Stanley & Co. International Limited and related corporations) and the permitted conduct (buying or offering/agreeing 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 of the Preference Shares, provided the stabilising action is taken with one of the following categories of counterparties/participants:
(a) an institutional investor;
(b) a “relevant person” as defined in section 275(2) of the SFA; 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.
From a practitioner’s perspective, the exemption is best understood as a controlled “safe harbour” from two SFA market conduct sections, but only when all conditions are met: (i) the instrument is the defined Preference Shares; (ii) the activity qualifies as “stabilising action” by the specified stabilising entity; (iii) the dealing occurs within the 30-day post-issuance period; and (iv) the counterparty fits one of the specified categories and, in the case of principal acquisitions, meets the minimum consideration threshold.
Although the extract does not reproduce Sections 197 and 198 themselves, the exemption’s drafting strongly suggests that those sections impose prohibitions or restrictions on certain dealing practices that could otherwise be characterised as market manipulation or improper market conduct. The Regulations effectively carve out stabilising conduct from those prohibitions, but only to the extent the conduct is consistent with the defined stabilising purpose and the specified counterparties.
How Is This Legislation Structured?
This Regulations is structured in a straightforward, three-regulation format:
Regulation 1 sets out the citation and commencement date.
Regulation 2 provides definitions that delimit the scope of the exemption, including the specific preference securities and the stabilising actor and conduct.
Regulation 3 contains the exemption clause, specifying the SFA provisions disapplied, the time limit (30 days from issue), and the eligible counterparties (institutional investors, relevant persons, or qualifying principal acquirers with a minimum consideration threshold).
Notably, the instrument does not create additional compliance procedures within the extract. Instead, it relies on the conditional exemption model: if the conditions are satisfied, the disapplied sections do not apply.
Who Does This Legislation Apply To?
The Regulations primarily applies to parties involved in stabilising activities in relation to the defined Preference Shares—most directly, Morgan Stanley & Co. International Limited and its related corporations, because the definition of “stabilising action” is limited to actions taken by that entity (or its related corporations). In practice, this will include the stabilising manager and any related dealing entities acting under its umbrella.
However, the exemption also depends on who the stabilising action is taken with. The Regulations therefore also affects counterparties and transaction participants, because stabilising action is exempt only when the counterparty is an institutional investor, a relevant person (as defined in the SFA), or a principal acquirer meeting the minimum consideration threshold of $200,000 (or equivalent) per transaction.
Why Is This Legislation Important?
This Regulations is important because it demonstrates how Singapore’s market conduct regime balances two competing objectives: (1) preventing improper or misleading market behaviour, and (2) allowing legitimate market practices that support orderly trading during new issues. Stabilising action can be beneficial, but it must be constrained to avoid undermining market integrity.
For practitioners, the key value lies in the precision of the exemption. It is not a broad permission to stabilise any preference shares. It is tied to a particular issuance (Shinsei Finance (Cayman) Limited’s February 2006 securities), a particular stabilising actor (Morgan Stanley & Co. International Limited and related corporations), and a limited time horizon (30 days from issuance). This kind of targeted exemption is typical where regulators permit a controlled deviation from general prohibitions for a specific transaction.
From an enforcement and compliance standpoint, the Regulations also provides a clear framework for assessing whether stabilising dealing is protected. If stabilising activity falls outside the defined parameters—wrong security, wrong actor, outside the 30-day window, or with an ineligible counterparty—the exemption would not apply, and the general prohibitions in Sections 197 and 198 of the SFA could become relevant.
Related Legislation
- Securities and Futures Act (Cap. 289) — particularly Sections 197, 198, 275(2), and the definition provision in 239(1)
- Futures Act (as referenced in the provided metadata)
- Stabilising Act (as referenced in the provided metadata)
- Timeline / legislative timeline materials for version control (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) Regulations 2006 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the official text for authoritative provisions.