Statute Details
- Title: Securities and Futures (Market Conduct) (Exemptions) Regulations 2006
- Act Code: SFA2001-S148-2006
- Type: Subsidiary legislation (SL)
- Authorising Act: Securities and Futures Act (Cap. 289)
- Enacting power: Section 337(1) of the Securities and Futures Act
- Commencement: 6 March 2006
- Status: Current version (as at 27 Mar 2026)
- Key provisions (from extract): Regulations 1–5B; Schedule (Maximum Prices for Stabilising Action)
- Notable sections: Regulation 3 (stabilising action where products not listed on approved exchange); Regulation 3A/3B (exemptions for stabilising action on/away from approved exchanges); Regulation 4 (bond dealings); Regulations 5–5B (exemptions from specified market conduct provisions in certain circumstances)
What Is This Legislation About?
The Securities and Futures (Market Conduct) (Exemptions) Regulations 2006 (“Market Conduct (Exemptions) Regulations”) create targeted exemptions from certain market conduct rules under the Securities and Futures Act (the “SFA”). In broad terms, the Regulations recognise that some trading activity—particularly “stabilising action” around the time of a securities offer—may be commercially necessary to support orderly trading and price discovery, but could otherwise breach strict prohibitions designed to prevent market manipulation.
In plain language, the Regulations allow specified participants (notably stabilising managers and dealers acting for them) to carry out stabilising activities without falling foul of particular SFA provisions, provided that strict conditions are met. The exemptions are not automatic: they are conditional on compliance with procedural safeguards (such as appointment and notification), quantitative limits (such as caps on the size of stabilising purchases), and disclosure requirements (such as statements in the offer document).
The Regulations also address other market conduct concerns, including certain dealings in bonds and exemptions relating to insider and associate-related provisions. The overall policy is to balance investor protection and market integrity with practical realities of capital markets transactions—especially during listing and underwriting processes.
What Are the Key Provisions?
1. Citation, commencement, and definitions (Regulations 1–2). The Regulations come into operation on 6 March 2006. Regulation 2 provides detailed definitions that are essential for applying the exemptions. Key defined terms include “offer”, “offer document”, “offer price”, “over-allotment”, “relevant specified products”, “stabilising action”, and “stabilising manager”. These definitions are drafted to capture the transaction context (e.g., offers in conjunction with listing on an approved exchange, and offers that may also involve overseas exchanges).
Practitioners should pay close attention to the definition of “stabilising action”. It is not limited to purchases on an exchange; it includes actions taken “in Singapore or elsewhere” by a stabilising manager (or a dealer on behalf of the stabilising manager) to buy, or offer or agree to buy, relevant specified products in order to stabilise or maintain market price. This breadth matters because the exemptions are designed to cover real-world stabilisation practices, including cross-border conduct.
2. Exemption where the relevant products are not listed on an approved exchange (Regulation 3). Regulation 3 provides a straightforward exemption: Sections 197, 198, 218(2) and 219(2) of the SFA do not apply to stabilising action taken in respect of an offer where the relevant specified products are not listed, and are not intended to be listed, on any approved exchange. This is a narrow carve-out focused on offers that do not involve listing on Singapore’s approved exchange framework.
3. Core stabilisation exemption for offers involving approved exchanges (Regulation 3A). Regulation 3A is the centrepiece for many listing-related transactions. It states that Sections 197, 198, 218(2) and 219(2) of the SFA shall not apply to stabilising action referred to in Regulation 3A(2) if and only if the stabilising manager and every dealer acting on the stabilising manager’s behalf comply with paragraphs (3) to (15) (as amended over time). The “if and only if” language signals that compliance is mandatory; partial compliance may jeopardise the exemption.
Regulation 3A(2) sets out conditions that must be satisfied for the exemption to apply. From the extract, these include: (a) the stabilising action is taken on the approved exchange (or, where there is also an overseas exchange listing, on either/both relevant venues); (c) the total value of the specified products being offered (based on the offer price) is not less than $25 million (or equivalent); and (d)–(e) quantitative caps on stabilising purchases—specifically, for debentures, the stabilising manager’s purchases must not exceed 20% of the total nominal value of debentures offered prior to any over-allotment; for non-debenture products, the total number purchased must not exceed 20% of the total number offered prior to over-allotment.
Regulation 3A also requires that the offer document states that stabilising action may be taken. The extract truncates the remainder, but the structure indicates further conditions in paragraphs (3) to (15), which typically include timing restrictions (e.g., stabilisation before the closing date), appointment and notification requirements for stabilising managers, and limits on the maximum price at which stabilising purchases may be made. The Schedule on “Maximum Prices for Stabilising Action” reinforces that price discipline is a key compliance element.
4. Stabilisation exemption where stabilisation is not taken on an approved exchange (Regulation 3B). Regulation 3B provides an analogous exemption framework for stabilising action that is not taken on an approved exchange (but may relate to overseas trading venues). While the extract does not show the full text, the regulation’s existence indicates that the law differentiates between stabilisation conducted on approved exchanges and stabilisation conducted elsewhere, and then imposes conditions accordingly. For cross-border deals, this is often critical: counsel must map where stabilising trades occur and ensure the correct exemption pathway is used.
5. Exemption in bond dealings (Regulation 4). Regulation 4 states that Sections 197 and 198 of the SFA shall not apply to dealings in bonds entered into by a corporation. Although the extract does not provide the full context, the practical effect is to carve out certain bond dealings from specified market conduct prohibitions. For practitioners, the key is to identify whether the dealing falls within the regulatory concept of “dealings in bonds” and whether the counterparty and transaction type meet the exemption’s scope.
6. Exemptions from insider/associate-related provisions (Regulations 5, 5A, 5B). Regulations 5, 5A and 5B provide further exemptions from specific SFA provisions: Regulation 5 exempts from Sections 218(2) and 219(2) in certain circumstances; Regulation 5A exempts from Section 218(3) for a person connected to a corporation who satisfies stated conditions; and Regulation 5B exempts from Section 219(3) for an insider mentioned in Section 219(1)(…) subject to specified circumstances. These provisions are designed to address situations where conduct that would otherwise be caught by strict prohibitions is permitted because it is not reasonably consistent with the policy concerns underlying those prohibitions (for example, where the connection/insider status does not translate into a manipulation risk, or where the conduct is part of a lawful corporate process).
Because the extract truncates the operative conditions in Regulations 5A and 5B, practitioners should consult the full text when advising. The key legal point is that these exemptions are typically “circumstance-based” and may depend on the nature of the connection, the timing of the dealing, and the relationship between the dealing and the relevant corporate event.
How Is This Legislation Structured?
The Regulations are structured as a short instrument with seven main regulations plus a Schedule. Regulations 1 and 2 deal with citation/commencement and definitions. Regulations 3, 3A and 3B form a cluster addressing stabilising action and the circumstances in which specified SFA market conduct provisions do not apply. Regulation 4 addresses bond dealings. Regulations 5, 5A and 5B provide additional exemptions from specified SFA provisions in certain circumstances, including provisions dealing with connected persons and insiders. Regulation 6 provides revocation, and Regulation 7 is deleted. The Schedule sets out “Maximum Prices for Stabilising Action”, which is central to compliance where stabilising purchases must not exceed prescribed price thresholds.
Who Does This Legislation Apply To?
The Regulations apply primarily to participants in capital markets transactions who may undertake or facilitate stabilising action. This includes stabilising managers appointed by issuers and dealers acting on behalf of stabilising managers. The definition of “dealer” is jurisdiction-sensitive: for stabilising action undertaken in Singapore, a dealer must be the holder of a capital markets services licence to deal in capital markets products; for stabilising action undertaken outside Singapore, the dealer must be licensed/approved/authorised or otherwise regulated under the foreign jurisdiction’s laws and requirements.
In addition, the exemptions relating to bond dealings and insider/connected-person provisions affect corporations and persons who may otherwise be caught by SFA market conduct rules. Practitioners advising issuers, underwriters, stabilising managers, and trading desks should treat the Regulations as a compliance map: the exemptions are available only to the extent that the transaction facts and the participant’s status align with the regulatory definitions and conditions.
Why Is This Legislation Important?
For lawyers working on listings, underwriting, and capital markets transactions, these Regulations are practically significant because stabilising action is common in certain offerings, but it sits close to the boundary between legitimate market support and prohibited market manipulation. The Regulations provide a structured legal pathway to conduct stabilisation lawfully, but only where the transaction meets quantitative thresholds (such as the $25 million minimum offer value) and where stabilising activity is constrained by caps (such as the 20% limit) and disclosure requirements (such as stating stabilisation may occur in the offer document).
From an enforcement and risk-management perspective, the “if and only if” drafting in Regulation 3A underscores that partial compliance may remove the exemption and expose parties to liability under the underlying SFA provisions. This makes documentation and operational controls essential: appointment letters and exchange notifications for stabilising managers, trade monitoring to ensure volume and price limits are respected, and offer document review to ensure the required stabilisation disclosures are included.
Finally, the bond and insider/connected-person exemptions show that the Regulations are not limited to stabilisation. They also provide targeted relief in other market conduct contexts. Counsel should therefore consider the Regulations as part of a broader market conduct compliance framework, coordinating advice on corporate dealing, insider dealing risk, and the handling of transactions involving connected persons.
Related Legislation
- Securities and Futures Act (Cap. 289) (including Sections 197, 198, 218, 219, and other referenced provisions)
- Futures Act
- Companies Act
- Bankruptcy Act
- Stabilising Act (as referenced in the metadata)
- Timeline (legislation versioning and amendments, including S 426/2010 and S 648/2018)
Source Documents
This article provides an overview of the Securities and Futures (Market Conduct) (Exemptions) Regulations 2006 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the official text for authoritative provisions.