Statute Details
- Title: Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Notes) (No. 10) Regulations 2004
- Act Code: SFA2001-S186-2004
- Type: Subsidiary Legislation (SL)
- Authorising Act: Securities and Futures Act (SFA), specifically section 337(1)
- Commencement: 7 April 2004
- Legislation Number: SL 186/2004
- Status: Current version as at 27 March 2026 (per the provided extract)
- Key Provisions: Section 2 (Definitions); Section 3 (Exemption)
- Relevant SFA Provisions Mentioned: Sections 197 and 198 (market conduct restrictions); sections 274 and 275(2) (specified categories of persons/investors); section 337(1) (power to make regulations)
What Is This Legislation About?
The Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Notes) (No. 10) Regulations 2004 is a targeted regulatory instrument. In plain language, it creates a limited exemption from certain “market conduct” rules in the Securities and Futures Act (the “SFA”) for stabilising activity carried out in relation to a specific issuance of fixed rate notes by Korea East & West Power Co. Ltd in April 2004.
In securities markets, “stabilising action” generally refers to regulated conduct undertaken around the time of issuance to help maintain orderly trading and reduce excessive price volatility. However, stabilising purchases can overlap with prohibitions against market manipulation or improper dealing. This set of Regulations therefore carves out a narrow permission: it allows specified persons to carry out stabilising action in respect of the defined notes, but only within strict conditions.
Practically, the Regulations are designed to balance two policy goals. First, they preserve investor protection and market integrity by keeping the general prohibitions in place. Second, they recognise that stabilisation can be a legitimate market practice when conducted by authorised participants and within a defined timeframe. The exemption is therefore time-limited and restricted to stabilising action in respect of particular notes and particular counterparties.
What Are the Key Provisions?
Section 1 (Citation and commencement) provides the legal identity and effective date. The Regulations may be cited as the “Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Notes) (No. 10) Regulations 2004” and came into operation on 7 April 2004. For practitioners, this matters because stabilising activity must be assessed against the law in force at the relevant time.
Section 2 (Definitions) is crucial because the exemption is only as broad as its defined terms. Two definitions drive the scope:
- “Notes” are defined narrowly as the fixed rate notes issued by Korea East & West Power Co. Ltd in April 2004 for a principal amount of up to US$300 million. This means the exemption is not a general stabilisation regime for all notes; it is tied to a particular issuance.
- “Stabilising action” is defined as an action taken in Singapore or elsewhere by specified market participants—Barclays Capital, Credit Suisse First Boston (Europe) Limited, Samsung Securities Co., Ltd., or any of their related corporations—to buy or offer or agree to buy the Notes in order to stabilise or maintain the market price of the Notes in Singapore or elsewhere.
From a compliance perspective, the definition is both participant-specific and purpose-specific. If the dealing is not undertaken by one of the listed entities (or their related corporations), or if the purpose is not stabilisation/price maintenance, the exemption would not be available.
Section 3 (Exemption) is the operative provision. It provides that, subject to paragraph (2), sections 197 and 198 of the SFA shall not apply to stabilising action carried out in respect of any of the Notes with either:
- (a) a person referred to in section 274 of the SFA; or
- (b) a sophisticated investor as defined in section 275(2) of the SFA.
Although the extract does not reproduce the content of SFA sections 197 and 198, the legal effect is clear: the Regulations remove the application of those market conduct restrictions to the specified stabilising action, but only when the stabilising trades are conducted with the relevant categories of counterparties.
Section 3(2) (Time limitation) imposes a further and significant constraint. The exemption does not apply to any stabilising action carried out at any time after the expiry of the period of 30 calendar days from the date of the issuance of the Notes. This is a classic regulatory safeguard: stabilisation is permitted only in the immediate post-issuance window, when price discovery and initial market formation occur.
For practitioners, the time limitation raises practical questions that should be handled carefully in transaction documentation and compliance monitoring: what constitutes the “date of issuance” for the Notes, how dealing dates are recorded, and whether any stabilising activity could be argued to fall outside the 30-day period. The Regulations’ wording is strict (“at any time after the expiry”), so conservative compliance controls are advisable.
How Is This Legislation Structured?
The Regulations are structured in a straightforward, three-section format:
- Section 1 sets out the citation and commencement.
- Section 2 provides definitions that delimit the scope of “Notes” and “stabilising action”.
- Section 3 contains the exemption from specified SFA provisions, including both counterparty conditions (sections 274 persons or sophisticated investors under section 275(2)) and a time limit (30 calendar days from issuance).
There are no additional parts or complex schedules in the extract provided. The legislative design is therefore highly targeted: it does not create a general stabilisation framework, but rather a narrow exemption for a particular issuance and defined stabilising participants.
Who Does This Legislation Apply To?
In terms of persons, the exemption is relevant to market participants who undertake stabilising action as defined. The definition of “stabilising action” is limited to actions taken by Barclays Capital, Credit Suisse First Boston (Europe) Limited, Samsung Securities Co., Ltd., or their related corporations. This means the exemption is not automatically available to any dealer or arranger; it is tied to the listed stabilising entities.
In terms of counterparties, Section 3(1) restricts the exemption to stabilising action carried out with either (i) persons referred to in section 274 of the SFA or (ii) sophisticated investors under section 275(2) of the SFA. Accordingly, even where the stabilising entity is one of the defined participants, the exemption would not cover stabilising trades conducted with other categories of investors unless those counterparties fall within the specified SFA categories.
Finally, the exemption is tied to the defined “Notes” issuance. Even if stabilising action is undertaken by one of the listed entities, it would not extend to different notes or different issuances outside the April 2004 Korea East & West Power Co. Ltd fixed rate notes (up to US$300 million) described in the definition.
Why Is This Legislation Important?
This Regulations instrument is important because it clarifies when stabilising conduct may occur without triggering certain SFA market conduct prohibitions. For lawyers advising issuers, lead managers, stabilising agents, or compliance teams, the Regulations provide a legally recognised pathway to conduct stabilisation within defined boundaries.
From a risk management standpoint, the exemption reduces uncertainty. Without such an exemption, stabilising purchases or offers to buy could potentially be scrutinised under the SFA’s market conduct rules (here, sections 197 and 198). By expressly disapplying those sections to qualifying stabilising action, the Regulations help market participants structure stabilisation activities in a manner that is more defensible and predictable.
However, the exemption is not a blanket permission. It is constrained by three major limitations: (1) the stabilising action must be performed by the defined entities (or their related corporations); (2) the stabilising trades must be with the specified SFA categories of counterparties (section 274 persons or sophisticated investors); and (3) stabilisation must occur within the 30 calendar day window after issuance. These constraints mean that compliance teams must implement robust controls around eligibility, counterparties, and dealing timelines.
In practice, this legislation is likely to be most relevant in the context of structured debt issuance documentation and stabilisation procedures. Lawyers should ensure that stabilisation arrangements, dealing authorisations, and investor classification checks align with the definitions and conditions in the Regulations, and that dealing logs can demonstrate compliance with the 30-day limit.
Related Legislation
- Securities and Futures Act (SFA) (Cap. 289) — particularly sections 197, 198, 274, 275(2), and the regulation-making power in section 337(1)
- Futures Act (as referenced in the provided metadata)
- Stabilising Act (as referenced in the provided metadata)
- Legislation Timeline (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 Notes) (No. 10) Regulations 2004 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the official text for authoritative provisions.