Statute Details
- Title: Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Preference Shares) Regulations 2008
- Act Code: SFA2001-S358-2008
- Legislation Type: Subsidiary legislation (SL)
- Authorising Act: Securities and Futures Act (Cap. 289)
- Enacting Power: Section 337(1) of the Securities and Futures Act
- Commencement: 11 July 2008
- Legislative Instrument No.: SL 358/2008
- Key Provisions: Section 2 (Definitions); Section 3 (Exemption)
- Status: Current version as at 27 March 2026 (per provided extract)
What Is This Legislation About?
The Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Preference Shares) Regulations 2008 (“Stabilising Action Exemption Regulations”) create a targeted exemption from certain market conduct provisions in the Securities and Futures Act. In plain terms, the Regulations allow a specific type of market activity—“stabilising action”—to occur in connection with the offer and listing of particular preference shares, without triggering the prohibitions that would otherwise apply.
Stabilising action is a common capital markets practice. When a new security is issued and begins trading, market makers or stabilising managers may buy the security (or arrange to buy it) to help maintain an orderly market and reduce excessive price volatility. However, stabilisation can also create risks of misleading the market. For that reason, the law generally restricts stabilisation and imposes conditions, disclosure, and timing limits.
This Regulations package is narrow in scope: it is designed for stabilising action in respect of two defined classes of preference shares issued in July 2008 by SMFG Preferred Capital USD 3 Limited and SMFG Preferred Capital GBP 2 Limited (collectively referred to as the “relevant preference shares”). The exemption is available only if the stabilising manager and any dealers acting on its behalf comply with detailed procedural and substantive safeguards.
What Are the Key Provisions?
1. Definitions and the “deal” being regulated (Section 2)
The Regulations define the key terms needed to apply the exemption. Practitioners should pay particular attention to the following concepts:
- “Stabilising action”: an action taken in Singapore or elsewhere by the stabilising manager (or a dealer on its behalf) to buy, or offer or agree to buy, the relevant preference shares in order to stabilise or maintain the market price.
- “Stabilising manager”: explicitly identified as Goldman Sachs International or any of its related corporations. This is a crucial limitation—other institutions cannot rely on the exemption unless they fall within this definition.
- “Relevant preference shares”: the “Dollar Preference Shares” (non-cumulative perpetual preferred securities issued in July 2008 by SMFG Preferred Capital USD 3 Limited) and the “Sterling Preference Shares” (issued by SMFG Preferred Capital GBP 2 Limited).
- Offer mechanics: “offer”, “offer document”, “offer price”, “closing date”, and “over-allotment” are defined to align the exemption with the structure of the offering and listing.
2. The exemption from specified statutory provisions (Section 3(1))
Section 3(1) provides the core legal effect: Sections 197, 198, 218(2) and 219(2) of the Securities and Futures Act do not apply to stabilising action undertaken in respect of the relevant preference shares, provided that the conditions in paragraphs (3) to (14) are satisfied.
Although the extract does not reproduce the full text of those Securities and Futures Act sections, the practical significance is clear: those provisions are part of the market conduct regime that would otherwise restrict or prohibit conduct that could distort prices or mislead investors. The Regulations therefore operate as a “safe harbour” for stabilisation, but only within tightly bounded parameters.
3. Threshold and eligibility conditions (Section 3(2))
The exemption is available only where the stabilising action is in respect of an offer meeting specified quantitative and disclosure requirements:
- Minimum size: the total value of the relevant preference shares offered (calculated based on the offer price) must be not less than $25 million (or equivalent in foreign currency).
- Cap on stabilising purchases: the stabilising manager’s purchases for stabilisation must not exceed 20% of the total number of relevant preference shares offered prior to any over-allotment.
- 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 over-allotment option details if applicable; and (iv) the maximum number of shares the stabilising manager may buy (capped at the 20% limit).
- Exchange announcement: 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 key information (including the maximum period and maximum number of shares).
- 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. Conduct requirements: “reasonable satisfaction” and timing (Sections 3(3)–(5))
The Regulations impose both substantive and temporal controls:
- Reasonable satisfaction re 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. It must also continue stabilising action only while reasonably satisfied that the price has not become false or misleading other than due to stabilising action itself.
- No stabilisation before offer price is publicly announced (Section 3(4)): stabilising action cannot begin before the date on which the earliest public announcement of the offer price is made through the relevant exchange.
- Hard stop dates (Section 3(5)): stabilising action must cease on the earlier of (a) expiry of 30 calendar days from commencement of trading, or 60 calendar days from the date of the earliest public announcement of the offer price; or (b) the date when the stabilising manager has bought the maximum number of shares it is permitted to buy under the offer document.
5. Trading restrictions and permitted exceptions (Sections 3(6)–(7))
A key market integrity feature is the restriction on selling during stabilisation:
- General prohibition on sell orders (Section 3(6)): the stabilising manager must not effect or cause to be effected any sell order of the relevant preference shares prior to the date of commencement of each stabilising action or during the permitted stabilisation period.
- Permitted activities (Section 3(7)): the prohibition does not prevent the stabilising manager or an associate (in the associate’s capacity as a dealer) from executing sell orders for persons who are not associates of the issuer, or selling on behalf of the issuer as part of the offer (including underwriting commitments).
6. Record-keeping and transparency (Section 3(8) and following)
The extract ends mid-way through Section 3(8), but it already signals an important compliance mechanism: the stabilising manager must keep a register in the form required by the listing exchange and record particulars of each stabilisation-related purchase (including price, quantity, and name). In practice, such registers support post-trade supervision and allow regulators and exchanges to verify that stabilisation stayed within the permitted cap, timing window, and disclosure framework.
Note on the truncated extract: The provided text cuts off after Section 3(8), but the Regulations clearly continue with further conditions (paragraphs (9) to (14)) governing how stabilisation must be documented, reported, and possibly disclosed to the market. For a practitioner, it is essential to obtain the complete text of Section 3 in the current version to ensure full compliance.
How Is This Legislation Structured?
The Regulations are structured as a short instrument with three operative provisions:
- Section 1: Citation and commencement (11 July 2008).
- Section 2: Definitions, including the scope of “stabilising action”, the identity of the “stabilising manager”, and the specific “relevant preference shares”.
- Section 3: The exemption mechanism, including eligibility conditions, trading restrictions, timing limits, and compliance requirements (including record-keeping).
From a legal drafting perspective, the Regulations function as a conditional exemption: the exemption is triggered only when all specified conditions are met, and it is limited to the defined offering and stabilisation participants.
Who Does This Legislation Apply To?
The Regulations apply to stabilising action taken in connection with offers of the defined Dollar Preference Shares and Sterling Preference Shares. The exemption is available only when the stabilising action is undertaken by the stabilising manager (Goldman Sachs International or related corporations) or a dealer acting on its behalf.
Accordingly, the practical audience includes: (i) the stabilising manager and its related corporations; (ii) dealers involved in executing stabilisation trades on the stabilising manager’s behalf; and (iii) issuers and offer participants who must ensure that the offer document and exchange announcements contain the required stabilisation disclosures. While the exemption is directed at the stabilising manager’s conduct, issuers and their advisers typically bear responsibility for the accuracy and completeness of the offer document and public announcements that condition the exemption.
Why Is This Legislation Important?
This Regulations instrument is important because it balances two competing objectives of market regulation: allowing stabilisation to support orderly trading in new issues, while preventing stabilisation from becoming a mechanism for market manipulation or misleading price formation.
For practitioners, the most significant value of the Regulations lies in the conditional safe harbour. If the stabilising manager complies with the eligibility thresholds (minimum offer value; 20% cap), disclosure obligations (offer document and exchange announcement), and conduct constraints (no stabilisation before offer price disclosure; strict cessation dates; restrictions on sell orders), then the stabilising action can proceed without the prohibitions in the specified Securities and Futures Act provisions applying.
Conversely, any failure—such as exceeding the 20% cap, starting stabilisation too early, omitting required disclosures, or continuing stabilisation beyond the permitted period—could expose the stabilising manager (and potentially other involved parties) to regulatory enforcement risk under the underlying market conduct provisions. The record-keeping requirement further underscores that compliance is not merely procedural; it must be demonstrable after the fact.
Related Legislation
- Securities and Futures Act (Cap. 289) — in particular the market conduct provisions referenced in Section 3(1) (Sections 197, 198, 218(2), 219(2)) and the regulation-making power in Section 337(1).
- Futures Act — referenced in the legislation metadata as related legislation.
- Stabilising Act — referenced in the legislation metadata as related legislation (context suggests a broader stabilisation framework, though the specific instrument is not identified in the extract).
- Timeline — the legislation timeline tool referenced in the metadata (useful for confirming the correct version as at a given 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) Regulations 2008 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the official text for authoritative provisions.