Statute Details
- Title: Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Preference Shares) Regulations 2007
- Act Code: SFA2001-S11-2007
- Type: Subsidiary Legislation (SL)
- Enacting Authority: Monetary Authority of Singapore (MAS)
- Authorising Act: Securities and Futures Act (Cap. 289), section 337(1)
- Commencement: 12 January 2007
- Regulation Number: SL 11/2007
- Status: Current version as at 27 March 2026
- Key Provisions (from extract): Regulation 1 (Citation and commencement), Regulation 2 (Definitions), Regulation 3 (Exemption)
What Is This Legislation About?
The Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Preference Shares) Regulations 2007 (“Stabilising Exemption Regulations”) create a targeted regulatory carve-out from certain market conduct prohibitions under the Securities and Futures Act (SFA). In plain language, the Regulations allow a stabilising manager (and, in limited circumstances, a dealer acting for that manager) to take “stabilising action” in connection with the listing of specific preference shares, without breaching the relevant SFA provisions—provided strict conditions are met.
Stabilisation is a common feature of capital markets transactions. During an initial public offering or listing, stabilising participants may buy (and sometimes offer to buy) securities to support or maintain the market price, typically to reduce volatility while the market absorbs new supply. However, stabilisation can also raise concerns about misleading price formation or improper market manipulation. The Regulations therefore balance market functioning with investor protection by imposing timing limits, volume caps, disclosure requirements, and conduct restrictions.
Importantly, this is not a general stabilisation regime for all securities. The definitions and the exemption are framed around particular “relevant preference shares” issued in January 2007 by MUFG Capital Finance 4 Limited (Euro Preference Shares) and MUFG Capital Finance 5 Limited (Sterling Preference Shares), and around a specific stabilising manager: Mitsubishi UFJ Securities International plc (and its related corporations). The exemption is therefore transaction- and issuer-specific, even though it uses concepts familiar to broader market conduct frameworks.
What Are the Key Provisions?
1. The exemption from specified SFA provisions (Regulation 3(1)). The core operative rule is that sections 197, 198, 218(2) and 219(2) of the SFA do not apply to stabilising action taken in respect of the relevant preference shares, if the stabilising action is undertaken by the stabilising manager or by a dealer on behalf of the stabilising manager, and if the conditions in Regulations 3(3) to (14) are satisfied. Practitioners should treat this as a “permission with conditions”: the exemption is not automatic; it is contingent on compliance with every relevant requirement.
2. Scope and eligibility: what stabilising action must relate to (Regulation 3(2)). The exemption applies only where the stabilising action is taken in respect of an offer of the relevant preference shares and where multiple threshold conditions are met. Key conditions include:
- Minimum offer size: the total value of the relevant preference shares offered (based on the offer price) must be not less than S$25 million (or equivalent in foreign currency).
- Volume cap: the stabilising manager’s total purchases for stabilisation must not exceed 20% of the total number of preference shares offered prior to any over-allotment (if applicable).
- Disclosure in the offer document: the offer document must state that stabilising action may be taken, the maximum stabilisation period, the over-allotment option details (if applicable), and the maximum number the stabilising manager may buy (not exceeding the 20% cap).
- Exchange announcement after closing date: a public announcement must be made through the relevant securities exchange on the business day immediately following the closing date, repeating the stabilisation disclosures and confirming the maximum number the stabilising manager may buy.
- 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.
3. “Reasonable satisfaction” standards and ongoing compliance (Regulation 3(3)). The stabilising manager must (a) take stabilising action only after being reasonably satisfied that the price is not false or misleading, and (b) continue stabilisation only after being reasonably satisfied that the price has not become false or misleading, except where the false/misleading condition arises other than by reason of stabilising action. This is a substantive conduct requirement: it imposes a judgment-based gatekeeping duty, not merely a procedural obligation.
4. Timing restrictions: when stabilisation can start and end (Regulations 3(4) and 3(5)). Stabilising action cannot begin before the earliest public announcement of the offer that states the offer price is made through the relevant exchange. Stabilisation also cannot continue beyond the earlier of two dates:
- 30 calendar days from the date of commencement of trading of the relevant preference shares on the exchange; or
- 60 calendar days from the date of the earliest public announcement of the offer price.
Additionally, stabilisation must stop when the stabilising manager has bought the maximum number it is permitted to buy under the offer document (Regulation 3(5)(b)). This means the stabilisation period is subject to both a time ceiling and a quantity ceiling.
5. Restrictions on sell orders during stabilisation (Regulations 3(6) and 3(7)). The Regulations prohibit the stabilising manager from effecting or causing to be effected any sell order of the relevant preference shares prior to the date of commencement of each stabilising action or during the period in which stabilising is permitted. However, there is an important carve-out: the prohibition does not prevent the stabilising manager or an associate of the stabilising manager, in the associate’s capacity as a dealer, from (i) executing sell orders for persons who are not associates of the issuer, or (ii) selling the preference shares on behalf of the issuer as part of the offer, including under underwriting commitments. This reflects a policy distinction between stabilisation-driven trading and ordinary client or underwriting-related sales.
6. Record-keeping and transaction registers (Regulation 3(8)). The stabilising manager must keep a register in the form required by the listed securities exchange and record particulars of each stabilisation-related purchase transaction, including price, quantity, and dealer name, before the end of the day on which the transaction is entered. While the extract truncates the remainder of Regulation 3, this provision signals that MAS and exchanges expect contemporaneous documentation to support surveillance and post-trade review.
7. Practical compliance note on the truncated remainder. The extract provided ends mid-sentence at Regulation 3(8). In practice, practitioners should obtain the full text of Regulation 3 (including paragraphs (9) to (14)) because those provisions typically cover further operational requirements—such as how the register is maintained, reporting/notification obligations, restrictions on offers to buy, and additional safeguards against misleading conduct. Even where the extract is incomplete, the structure indicates a comprehensive compliance framework beyond the visible paragraphs.
How Is This Legislation Structured?
The Regulations are concise and structured around a short set of provisions:
- Regulation 1 (Citation and commencement): provides the short title and the commencement date (12 January 2007).
- Regulation 2 (Definitions): defines key terms used in the exemption, including “closing date,” “dealer,” “Euro Preference Shares,” “Sterling Preference Shares,” “offer,” “offer document,” “offer price,” “over-allotment,” “stabilising action,” and “stabilising manager.”
- Regulation 3 (Exemption): sets out the exemption from specified SFA market conduct provisions and then enumerates the conditions that must be satisfied, including eligibility thresholds, disclosure requirements, timing limits, trading restrictions, and record-keeping duties.
From a practitioner’s perspective, Regulation 3 is the operative core. Regulation 2 is equally important because it defines the precise securities and the stabilising manager to which the exemption applies.
Who Does This Legislation Apply To?
The Regulations apply to stabilising action taken in respect of the relevant preference shares—namely the Euro Preference Shares and Sterling Preference Shares issued in January 2007 by the specified MUFG entities. The exemption is available only where the stabilising action is undertaken by the stabilising manager (Mitsubishi UFJ Securities International plc) or by a dealer acting on behalf of that stabilising manager.
In addition, the Regulations indirectly affect other market participants involved in the offer process—such as the issuer and those preparing the offer document—because the exemption is conditioned on what is disclosed in the offer document and what is announced through the securities exchange after the closing date. While the issuer is not the stabilising manager, the issuer’s disclosure obligations are critical to enabling the stabilising manager to operate lawfully under the exemption.
Why Is This Legislation Important?
This legislation is important because it provides a legally controlled pathway for stabilisation activity in a specific transaction context. Without such an exemption, stabilising trades could risk falling within the prohibitions in the SFA relating to market conduct—potentially exposing the stabilising manager and its dealers to regulatory action or enforcement consequences.
For practitioners, the Regulations demonstrate how Singapore regulators approach the tension between legitimate price support and market integrity. The conditions—minimum offer size, strict purchase caps (20%), mandatory disclosure, exchange announcements, and hard timing limits—are designed to ensure that stabilisation is transparent, limited in scope, and time-bound. The “reasonably satisfied” standard further requires the stabilising manager to actively monitor whether the price is becoming false or misleading.
From a deal-execution standpoint, the Regulations also highlight the operational work required to comply: maintaining a stabilisation register, ensuring trading systems prevent prohibited sell orders, coordinating announcements with the exchange calendar, and ensuring that offer document disclosures accurately reflect the maximum stabilisation quantity and period. These are not merely drafting points; they are compliance controls that must be implemented in the trading and documentation workflow.
Related Legislation
- Securities and Futures Act (Cap. 289): particularly the market conduct provisions referenced in the exemption (sections 197, 198, 218(2), 219(2)).
- Futures Act (as referenced in the legislation metadata timeline context).
- Stabilising Act (as referenced in the legislation metadata timeline context).
- Timeline / Legislation timeline materials associated with the MAS legislation portal entry.
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 2007 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the official text for authoritative provisions.