Statute Details
- Title: Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Preference Shares) Regulations 2009
- Act Code: SFA2001-S58-2009
- Type: Subsidiary Legislation (SL)
- Authorising Act: Securities and Futures Act (Cap. 289)
- Enacting power: Section 337(1) of the Securities and Futures Act
- Citation: SL 58/2009
- Commencement: 20 February 2009
- Status: Current version (as at 27 March 2026)
- Key provisions (from extract): Section 1 (citation and commencement), Section 2 (definitions), Section 3 (exemption)
- Legislative focus: Exemption from specified market conduct provisions for “stabilising action” in relation to a defined offer of preference shares
What Is This Legislation About?
The Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Preference Shares) Regulations 2009 (“Stabilising Action Exemption Regulations”) creates a targeted regulatory carve-out for certain market stabilisation activities carried out in connection with a specific securities offering. In plain terms, it allows the stabilising manager (and dealers acting on its behalf) to take limited steps to support or maintain the market price of the relevant preference shares after the offer begins—without automatically triggering the usual prohibitions and restrictions in the Securities and Futures Act (“SFA”) on market conduct.
Stabilisation is a common feature of capital markets transactions. However, because stabilising purchases can resemble conduct that may distort price discovery, regulators typically impose strict conditions: stabilisation must be disclosed, limited in size, time-bound, and conducted in a way that does not mislead the market. This legislation is designed to balance two competing objectives: (1) permitting stabilisation to reduce volatility and support orderly trading, and (2) protecting investors and market integrity by ensuring stabilisation is transparent and constrained.
Importantly, the exemption is not general. It is tied to a defined set of “Preference Shares” issued in February 2009 by Mizuho Capital Investment (USD) 2 Limited, and to an “offer” made in conjunction with the listing of those preference shares on a securities exchange. The Regulations therefore function as a transaction-specific regulatory instrument rather than a broad framework for all stabilisation activities.
What Are the Key Provisions?
1. Citation, commencement, and definitions (Sections 1 and 2)
Section 1 provides the citation and commencement date: the Regulations came into operation on 20 February 2009. Section 2 defines key terms used throughout the exemption regime. For practitioners, the definitions are crucial because they determine the boundaries of the exemption.
Notable definitions include:
- “Preference Shares”: non-cumulative perpetual preferred securities issued in February 2009 by Mizuho Capital Investment (USD) 2 Limited, with a principal amount up to US$3,000,000,000. This definition makes the exemption transaction-specific.
- “stabilising action”: actions taken in Singapore or elsewhere by the stabilising manager (or a dealer on its behalf) to buy, or to offer or agree to buy, preference shares to stabilise or maintain their market price.
- “stabilising manager”: Merrill Lynch Pierce, Fenner & Smith Incorporated or any of its related corporations.
- “offer document” and “offer”: documents and offers for subscription or purchase made in conjunction with listing on a securities exchange.
- “closing date”: in relation to an offer, the date of issue of the preference shares.
2. The exemption from specified SFA market conduct provisions (Section 3(1))
Section 3(1) is the operative provision. It states that Sections 197, 198, 218(2) and 219(2) of the SFA shall not apply to stabilising action taken in respect of the defined offer of the preference shares, provided the conditions in paragraphs (3) to (14) are complied with.
In practical terms, this means that stabilisation that meets the Regulations’ conditions is carved out from certain market conduct restrictions that would otherwise apply. The exemption is conditional: failure to comply with any requirement can expose the stabilising manager and/or dealers to the underlying SFA prohibitions.
3. Eligibility conditions for stabilising action (Section 3(2))
Section 3(2) sets out when stabilising action qualifies for the exemption. The stabilising action must be undertaken for an offer where multiple conditions are met, including:
- Minimum size: the total value of the preference shares offered (based on the offer price) is not less than $25 million (or equivalent in foreign currency).
- Cap on stabilising purchases: the stabilising manager’s purchases to undertake stabilising action 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 period during which it may be taken, details of any over-allotment option, and the maximum number of shares the stabilising manager may buy (not exceeding the 20% cap).
- Public announcement after closing: a public announcement must be made through the relevant securities exchange on the business day immediately following the closing date, repeating the key stabilisation disclosures (including 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: “not false or misleading”, timing limits, and order restrictions (Sections 3(3) to (7))
Even where the transaction qualifies, stabilisation must be conducted properly.
Section 3(3) requires the stabilising manager to:
- 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 by reason of stabilising action.
Section 3(4) imposes a strict precondition: no stabilising action may be taken before the date on which the earliest public announcement of the offer that states the offer price is made through the relevant securities exchange.
Section 3(5) then limits the maximum duration of stabilisation. Stabilising action must not be taken after the earlier of:
- the expiry of 30 calendar days from the date of commencement of trading; or
- the expiry of 60 calendar days from the date of the earliest public announcement stating the offer price;
- or the date the stabilising manager has bought the maximum number of shares permitted under the offer document (whichever is earlier).
Section 3(6) restricts trading behaviour: the stabilising manager must not effect or cause to be effected any sell order of the preference shares prior to the date of commencement of each stabilising action or during the permitted stabilisation period.
However, Section 3(7) provides a limited exception. It does not prohibit:
- the stabilising manager; or
- an associate of the stabilising manager, acting in its capacity as a dealer,
from executing sell orders for persons who are not associates of the issuer, or selling the preference shares on behalf of the issuer as part of the offer (including under underwriting commitments). This reflects the policy that stabilisation should not be used as a cover for broader selling pressure.
5. Record-keeping and inspection (Sections 3(8) and 3(9))
The Regulations require robust documentation. Section 3(8) obliges the stabilising manager to:
- keep a register in the form required by the securities exchange; and
- record particulars of each stabilising purchase transaction (price, quantity, and dealer name) before the end of the day of the transaction.
Section 3(9) addresses the location of the register. If kept in Singapore, it must be made available for inspection by the Authority or the securities exchange within the time stipulated by them.
6. Cross-border register availability (Section 3(10))
The extract indicates Section 3(10) deals with registers kept outside Singapore, requiring either the ability to bring the register into Singapore for inspection within stipulated timeframes, or (if not capable) alternative arrangements (the extract is truncated). Practitioners should treat this as a compliance-critical provision: regulators expect transaction-level transparency regardless of where records are maintained.
Note on the truncated text
The provided extract ends mid-sentence in Section 3(10). In practice, a lawyer should obtain the full text of the Regulations (including paragraphs (10) to (14)) because those provisions likely contain additional procedural requirements—such as further reporting, publication, or final confirmation obligations—commonly found in stabilisation exemption regimes.
How Is This Legislation Structured?
The Regulations are short and structured around a single exemption mechanism:
- Section 1 sets out the citation and commencement.
- Section 2 provides definitions that define the scope of the exemption (including the specific “Preference Shares” and the stabilising manager).
- Section 3 contains the exemption, including:
- the list of SFA provisions disapplied for qualifying stabilising action;
- conditions for eligibility (size, disclosure, announcements, cash terms);
- conduct requirements (price integrity, timing, sell-order restrictions); and
- record-keeping and inspection obligations.
There are no separate “Parts” indicated in the metadata; the Regulations operate as a compact set of operative rules.
Who Does This Legislation Apply To?
The Regulations apply to the stabilising manager (Merrill Lynch Pierce, Fenner & Smith Incorporated and related corporations) and to dealers acting on behalf of the stabilising manager, but only in relation to the defined offer of the defined Preference Shares issued in February 2009 by Mizuho Capital Investment (USD) 2 Limited.
While the exemption is framed as disapplying certain SFA provisions, the practical compliance burden falls on the entities conducting stabilisation and their compliance teams: they must ensure the offer documentation and exchange announcements contain the required disclosures, that stabilisation is time- and quantity-limited, and that transaction records are maintained and made available for inspection.
Why Is This Legislation Important?
This legislation is important because it provides a lawful pathway for market stabilisation in Singapore for a specific offering, while simultaneously imposing safeguards designed to protect market integrity. For practitioners, the key value is certainty: stabilising action that meets the conditions should fall within the exemption, reducing enforcement risk under the disapplied SFA provisions.
At the same time, the Regulations are strict and condition-heavy. The exemption is not automatic; it depends on compliance with disclosure requirements (offer document and exchange announcements), quantitative limits (20% cap), timing limits (30/60-day framework and maximum purchase date), and conduct constraints (no stabilisation before offer-price announcement; no sell orders during stabilisation period, subject to narrow exceptions). These are precisely the areas where transaction teams often face operational challenges—particularly around record-keeping and ensuring that “reasonably satisfied” price integrity assessments are properly documented.
Finally, the record-keeping and inspection provisions underline the regulator’s expectation of transparency. Even where stabilisation is permitted, regulators and exchanges must be able to verify that stabilisation was conducted within the permitted parameters. Lawyers advising issuers, stabilising managers, or dealers should therefore treat compliance documentation as part of the transaction’s legal risk management, not merely administrative housekeeping.
Related Legislation
- Securities and Futures Act (Cap. 289) — in particular the market conduct provisions referenced in the exemption (Sections 197, 198, 218(2), 219(2)).
- Futures Act — referenced in the statute metadata as related legislation (context may be relevant for broader market conduct frameworks).
- Stabilising Act — referenced in the statute metadata; relevant for understanding the broader stabilisation policy context.
- Timeline — the legislation timeline should be consulted to confirm the correct version when advising on compliance.
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 2009 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the official text for authoritative provisions.