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
- Legislation 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 (per provided extract)
- Key Provisions (from extract): Section 1 (Citation and commencement); Section 2 (Definitions); Section 3 (Exemption)
- Regulatory 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”) create a narrow, regulated pathway for market stabilisation activities in connection with a specific 2009 offer of preference shares. In plain terms, the Regulations recognise that stabilising transactions—typically undertaken by a stabilising manager to support or maintain the market price of newly issued securities—can be permissible, but only if strict conditions are met.
The Regulations operate by granting an exemption from certain provisions of the Securities and Futures Act (“SFA”) that would otherwise restrict or prohibit conduct that could be characterised as misleading, manipulative, or otherwise improper market conduct. The exemption is not general. It applies only to stabilising action “in respect of an offer” of the defined “Preference Shares” and only when the stabilising manager (or a dealer acting on its behalf) complies with the detailed procedural and substantive safeguards set out in the Regulations.
Practically, the Regulations are designed to balance two policy objectives: (1) allowing stabilisation to reduce volatility and support orderly trading around a new listing, and (2) protecting investors and market integrity by ensuring stabilisation is transparent, time-limited, capped in size, and conducted only when the stabilising manager is satisfied that the price is not false or misleading.
What Are the Key Provisions?
1. Definitions and the scope of the exemption (Sections 1 and 2). The Regulations define key terms that control when the exemption can be used. Most importantly, they define “Preference Shares” as non-cumulative perpetual preferred securities issued in February 2009 by Mizuho Capital Investment (USD) 2 Limited for a principal amount of up to US$3,000,000,000. This definition makes clear that the Regulations are offer-specific: they are not a generic stabilisation regime for any preference share issuance.
The Regulations also define “stabilising action” as actions taken in Singapore or elsewhere by the stabilising manager (or a dealer on behalf of the stabilising manager) to buy—or to offer or agree to buy—Preference Shares in order to stabilise or maintain the market price of the Preference Shares in Singapore or elsewhere. The “stabilising manager” is identified as Merrill Lynch Pierce, Fenner & Smith Incorporated or any of its related corporations. This matters because the exemption is tied to particular market participants and their conduct.
2. The exemption from specified SFA provisions (Section 3(1)). Section 3(1) provides 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, provided that paragraphs (3) to (14) are complied with. While the extract does not reproduce the content of those SFA sections, the structure indicates that those provisions likely address market conduct restrictions relevant to trading, false or misleading conduct, and/or improper trading practices. The exemption therefore functions as a “safe harbour” for stabilisation, but only within the boundaries set by the Regulations.
3. Conditions for eligibility: size, disclosure, and timing (Section 3(2)). Section 3(2) sets out the threshold and disclosure requirements that must be satisfied before stabilising action can be undertaken. The stabilising action must be in respect of an offer where:
- Value threshold: the total value of the Preference Shares offered (based on the offer price) is not less than S$25 million (or its equivalent in foreign currency).
- Cap on stabilising purchases: the total number of Preference Shares that the stabilising manager buys for stabilising action does not exceed 20% of the total number of Preference Shares being offered prior to any over-allotment (if applicable).
- Offer document disclosure: 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 Preference Shares the stabilising manager may buy (capped by the 20% limit).
- Public announcement after closing date: a public announcement must be made through the relevant securities exchange on the business day immediately following the closing date of the offer, repeating the key stabilisation disclosures (including maximum period and maximum number).
- Cash terms and fixed price: the offer is on cash terms and is (or has been) made at a specific price payable in any currency.
These conditions are critical for practitioners because they combine quantitative limits (value and 20% cap) with transparency requirements (offer document and exchange announcement). If any disclosure is missing or inaccurate, the exemption may fail, exposing stabilising trades to the underlying SFA market conduct provisions.
4. Conduct standards: price integrity and “no stabilisation before/after” rules (Sections 3(3)–(6)). Even where eligibility conditions are met, the stabilising manager must comply with behavioural constraints:
- Reasonable satisfaction on price truthfulness (Section 3(3)): the stabilising manager must take stabilising action only after being reasonably satisfied that the price is not false or misleading, and must continue only if reasonably satisfied that the price has not become false or misleading other than by reason of stabilising action.
- Earliest permissible start (Section 3(4)): no stabilising action may be taken before the date on which the earliest public announcement of the offer stating the offer price is made through the relevant exchange.
- Hard stop (Section 3(5)): stabilising action must not be taken after 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 stating the offer price (whichever is earlier), and (b) the date on which the stabilising manager has bought the maximum number of Preference Shares it is permitted to buy under the offer document.
- Restriction on sell orders (Section 3(6)): subject to an exception in paragraph (7), 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 stabilising period.
5. Limited exceptions to the sell-order restriction (Section 3(7)). Section 3(7) clarifies that paragraph (6) does not prohibit the stabilising manager (or an associate of the stabilising manager acting 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 pursuant to underwriting commitments). This is a practical carve-out: it recognises that stabilisation managers and their groups may have other legitimate dealing activities, but it confines them to specified contexts.
6. Record-keeping and inspection (Sections 3(8)–(10) and beyond). The Regulations require robust documentation. Under Section 3(8), the stabilising manager must keep a register in the form required by the listing exchange and record particulars of each stabilising purchase transaction, including price, quantity, and dealer name, before the end of the day of the transaction. Section 3(9) provides that if the register is kept in Singapore, it must be made available for inspection by the Authority or the exchange within the time stipulated. Section 3(10) addresses registers kept outside Singapore, requiring capability to bring the register into Singapore for inspection or, if not capable, providing an alternative mechanism (the extract truncates the remainder, but the intent is clear: ensure regulatory access).
For legal practitioners, these record-keeping provisions are often the most litigated in practice because they are the evidential backbone for demonstrating that stabilisation was conducted within the exemption. Failure to maintain or produce the register can undermine the stabilising manager’s ability to rely on the exemption.
How Is This Legislation Structured?
The Regulations are short and structured around three core provisions:
- Section 1 (Citation and commencement): sets the name of the Regulations and their commencement date (20 February 2009).
- Section 2 (Definitions): defines the key terms used in the exemption, including “Preference Shares,” “stabilising action,” “stabilising manager,” and offer-related concepts such as “offer document,” “offer price,” “over-allotment,” and “closing date.”
- Section 3 (Exemption): contains the operative exemption and its conditions, including eligibility thresholds, disclosure requirements, conduct rules, limits on stabilising purchases, restrictions on sell orders, and record-keeping/inspection obligations.
Although the extract truncates the later parts of Section 3, the overall architecture is clear: Section 3 is a comprehensive compliance checklist for stabilising managers seeking to benefit from the exemption.
Who Does This Legislation Apply To?
The Regulations apply to stabilising action taken in respect of the defined February 2009 offer of the specified “Preference Shares” issued by Mizuho Capital Investment (USD) 2 Limited. The exemption is available only for stabilising action undertaken by the “stabilising manager” (Merrill Lynch Pierce, Fenner & Smith Incorporated or its related corporations) or by a dealer acting on behalf of that stabilising manager.
Accordingly, the primary regulated parties are the stabilising manager and its associated dealing entities (including dealers executing orders on its behalf). However, the Regulations also indirectly affect issuers and their advisers because the offer document and public announcements must include specific stabilisation disclosures. If an issuer’s offering materials do not meet the statutory disclosure content, the stabilising manager may be unable to rely on the exemption.
Why Is This Legislation Important?
This legislation is important because it provides a controlled legal mechanism for stabilisation in a market context where stabilising trades can otherwise be viewed as potentially manipulative or misleading. By carving out a limited exemption from specified SFA provisions, the Regulations give market participants certainty—provided they comply with the strict conditions.
For practitioners, the Regulations are a practical compliance document. They require careful coordination between legal disclosure (offer document and exchange announcements), trading operations (timing, caps, and order restrictions), and compliance evidence (daily transaction registers and inspection readiness). The “hard stop” dates and the 20% cap on stabilising purchases are particularly significant because they define the maximum permissible scope of stabilisation and therefore the boundary between lawful stabilisation and potentially prohibited conduct.
Finally, the price-integrity standard—requiring the stabilising manager to be reasonably satisfied that the price is not false or misleading—introduces a substantive judgement element. This means compliance is not purely mechanical; it requires documented internal assessments and ongoing monitoring during the stabilisation period.
Related Legislation
- Securities and Futures Act (Cap. 289): In particular, Sections 197, 198, 218(2), and 219(2) (as referenced by the exemption)
- Futures Act: Listed in the provided metadata as related legislation
- Stabilising Act: Listed in the provided metadata as related legislation
- Timeline / Securities law timeline resources: For version control and amendment history (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 2009 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the official text for authoritative provisions.