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
- Type: Subsidiary Legislation (SL)
- Enacting Act: Securities and Futures Act (Cap. 289)
- Authorising Provision: Section 337(1) of the Securities and Futures Act
- Regulation Number: SL 358/2008
- Commencement Date: 11 July 2008
- Status: Current version as at 27 March 2026
- Key Provisions (from extract): Section 2 (Definitions); Section 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 2008 (“Stabilising Exemption Regulations”) create a targeted exemption from certain market conduct rules in the Securities and Futures Act (“SFA”) for stabilising activity relating to a specific class of preference shares issued in July 2008. In practical terms, the Regulations permit a stabilising manager (and, in limited circumstances, dealers acting on its behalf) to take certain steps to support or maintain the market price of the relevant preference shares during a defined stabilisation period—without breaching specified statutory prohibitions.
Stabilisation is a familiar feature of capital markets transactions. When new securities are launched, trading can be volatile. Market participants may use stabilisation techniques to reduce extreme price fluctuations. However, stabilisation can also raise investor-protection concerns if it is used to mislead the market or to create an artificial price. Accordingly, the SFA contains market conduct provisions that restrict manipulative or misleading conduct. This subsidiary legislation carves out a narrow, conditions-based pathway for stabilisation, but only where the transaction and conduct meet strict requirements.
Importantly, the exemption is not general. It is tied to “relevant preference shares” defined in the Regulations—namely “Dollar Preference Shares” and “Sterling Preference Shares” issued by specified entities in July 2008. The exemption is therefore best understood as a transaction-specific regulatory instrument designed to facilitate a particular issuance while preserving safeguards.
What Are the Key Provisions?
1. Definitions that frame the exemption
Section 2 sets out definitions that determine who may act and what conduct is covered. Several definitions are particularly important for practitioners:
- “Stabilising action” is defined as actions 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 their market price.
- “Stabilising manager” is expressly identified as Goldman Sachs International or any of its related corporations. This is a critical limitation: the exemption is not available to other banks or arrangers unless they fall within the defined stabilising manager group.
- “Relevant preference shares” means either the Dollar Preference Shares (non-cumulative perpetual preferred securities issued by SMFG Preferred Capital USD 3 Limited, up to US$4,000,000,000) or the Sterling Preference Shares (issued by SMFG Preferred Capital GBP 2 Limited, up to £1,500,000,000).
- “Offer” and “offer document” are defined broadly to include subscription or purchase offers made in conjunction with listing on a securities exchange, and the associated public materials.
2. The exemption from specified SFA market conduct provisions
Section 3(1) provides the operative exemption. It states 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 relevant preference shares, provided that the conditions in paragraphs (3) to (14) are complied with.
While the extract does not reproduce the full text of SFA Sections 197, 198, 218(2) and 219(2), the structure indicates that these are the provisions that would otherwise restrict stabilisation or related dealing activity. The Regulations therefore function as a “safe harbour” from those prohibitions, but only if the stabilising manager’s conduct stays within the permitted boundaries.
3. Transaction thresholds and limits on stabilising purchases
Section 3(2) specifies when stabilising action may be taken. The stabilising action must relate to an offer where:
- Minimum size: the total value of the relevant preference shares offered (based on the offer price) is not less than S$25 million (or equivalent in foreign currency).
- Cap on stabilising purchases: the total number of relevant preference shares that the stabilising manager buys for stabilisation must not exceed 20% of the total number of relevant 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 any), and the maximum number of shares the stabilising manager may buy (not exceeding the 20% cap).
- 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 the maximum number of shares).
- 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 requirements are not merely procedural. They define the scope of the exemption and create evidentiary benchmarks (offer document content and exchange announcements) that regulators and courts can use to assess compliance.
4. Timing restrictions: when stabilising can start and end
Section 3(4) prohibits stabilising action before the date on which the earliest public announcement of the offer that states the offer price is made through the relevant securities exchange. This ensures that stabilisation does not occur before the market has the key pricing information.
Section 3(5) then imposes an outer limit. Stabilising action must not be taken after the earlier of:
- 30 calendar days from the date of commencement of trading of the relevant preference shares on the securities exchange; or
- 60 calendar days from the date of the earliest public announcement of the offer stating the offer price; or
- the date when the stabilising manager has bought the maximum number of shares it is permitted to buy under the offer document.
This “earlier of” structure is important. It means stabilisation may end sooner due to either time or volume caps, whichever occurs first.
5. Price integrity and restrictions on selling
Section 3(3) requires the stabilising manager to act with a reasonable satisfaction standard. Specifically, the stabilising manager must:
- take stabilising action only after being reasonably satisfied that the price is not false or misleading; and
- continue stabilising action only after being reasonably satisfied that the price has not become false or misleading (other than due to stabilising action itself).
Section 3(6) restricts sell orders: 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 period in which stabilising action is permitted. This is a key investor-protection safeguard designed to prevent stabilisation from being used alongside selling activity that could distort price signals.
However, Section 3(7) provides limited carve-outs. It does not prohibit:
- the stabilising manager; or
- an associate of the stabilising manager, in its 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). This balances the exemption with the practical realities of underwriting and client dealing.
6. Record-keeping and transparency
Even though the extract truncates the remainder of Section 3, the visible portion of Section 3(8) indicates that the stabilising manager must keep a register in the form required by the listing securities exchange and record particulars of each stabilising purchase transaction, including price, quantity, and name. Such record-keeping is essential for post-trade supervision and enforcement.
Practitioners should assume that the truncated paragraphs (3(9) to 3(14)) likely contain additional procedural requirements typical of stabilisation regimes—such as reporting obligations, publication of stabilisation results, restrictions on communications, and conditions for the register’s availability to the regulator or exchange. The exemption is explicitly conditional on compliance with paragraphs (3) to (14), so full-text review is necessary before relying on the exemption.
How Is This Legislation Structured?
The Regulations are concise and structured around three main provisions:
- Section 1 (Citation and commencement): provides the short title and the commencement date (11 July 2008).
- Section 2 (Definitions): defines key terms such as “stabilising action,” “stabilising manager,” “relevant preference shares,” and transaction-related concepts like “offer document,” “offer price,” and “over-allotment.”
- Section 3 (Exemption): sets out the exemption from specified SFA market conduct provisions and the detailed conditions governing when and how stabilising action may be taken.
Who Does This Legislation Apply To?
The Regulations apply to stabilising activity undertaken in connection with offers of the defined preference shares (the “Dollar Preference Shares” and “Sterling Preference Shares”) made in conjunction with listing on a securities exchange. The exemption is available only where the stabilising action is undertaken by the stabilising manager (Goldman Sachs International or its related corporations) or by a dealer on behalf of the stabilising manager.
Accordingly, the primary regulated parties are the stabilising manager and its associated dealing entities acting within the permitted framework. Issuers and other market participants are not the direct beneficiaries of the exemption, but they are indirectly affected because the offer document and exchange announcements must include specific stabilisation disclosures, and underwriting/issuer-related selling activities must fit within the carve-outs.
Why Is This Legislation Important?
This legislation matters because it provides a controlled legal pathway for stabilisation—an activity that, absent an exemption, could trigger prohibitions under the SFA’s market conduct regime. For capital markets practitioners, the Regulations are a practical compliance tool: they define the boundaries of permissible stabilising purchases, the required disclosures, and the timing and volume limits.
From an enforcement perspective, the conditions are designed to ensure transparency and market integrity. The requirement to disclose stabilisation in the offer document and to announce key stabilisation parameters through the exchange creates an audit trail. The “reasonable satisfaction” standard regarding misleading or false prices provides a substantive behavioural safeguard. The restrictions on selling orders further reduce the risk that stabilisation is used to manipulate price rather than to manage orderly trading.
Finally, because the exemption is transaction-specific (tied to particular preference shares and a named stabilising manager), it underscores a broader regulatory theme: stabilisation is not automatically lawful. It is lawful only when the market is informed, the activity is limited, and the stabilising manager’s conduct remains consistent with investor-protection objectives.
Related Legislation
- Securities and Futures Act (Cap. 289): Sections 197, 198, 218(2), and 219(2) (as referenced for the exemption)
- Futures Act (listed in the provided metadata as related legislation)
- Stabilising Act (listed in the provided metadata as related legislation)
- Timeline (legislation timeline reference 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 2008 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the official text for authoritative provisions.