Statute Details
- Title: Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Notes) (No. 13) Regulations 2005
- Act Code: SFA2001-S142-2005
- Type: Subsidiary Legislation (SL)
- Authorising Act: Securities and Futures Act (SFA) (notably section 337(1))
- Legislative Instrument No.: SL 142/2005
- Citation: Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Notes) (No. 13) Regulations 2005
- Commencement: 23 March 2005
- Status: Current version as at 27 March 2026 (per the legislation record)
- Key Provisions: 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 Notes) (No. 13) Regulations 2005 is a targeted regulatory instrument. In plain terms, it creates a narrow exemption from certain market conduct restrictions in the Securities and Futures Act (SFA) for a specific kind of trading activity—namely, “stabilising action”—in relation to a particular bond/notes issuance.
Stabilising action is a practice used in some securities offerings to help manage short-term price volatility after issuance. Market participants may buy (or offer to buy) securities to support the market price. However, because such conduct can resemble improper market manipulation, the SFA generally restricts or prohibits certain dealing activities. This Regulations package carves out an exception so that stabilisation can occur lawfully, but only if strict conditions are met.
Importantly, this exemption is not general-purpose. It is tied to a defined set of “Notes” (a particular 5-year fixed rate notes issuance by Indian Railway Finance Corporation Limited) and a defined stabiliser (ABN AMRO Bank N.V. or its related corporations), and it applies only within a limited time window after issuance. This makes the Regulations highly relevant for practitioners advising on compliance for specific structured transactions rather than ongoing trading programmes.
What Are the Key Provisions?
Section 1: Citation and commencement provides the formal name of the Regulations and states that they come into operation on 23 March 2005. For legal practice, this matters when assessing whether stabilising activity occurred within the regulatory framework applicable at the relevant time.
Section 2: Definitions sets the boundaries of the exemption. Two definitions are central:
- “Notes” are defined very specifically as the 5-year fixed rate notes due March 2010 issued by Indian Railway Finance Corporation Limited for a principal amount of up to ¥15,000,000,000.
- “stabilising action” is defined as an action taken in Singapore or elsewhere by ABN AMRO Bank N.V. (or any of its related corporations) to buy, or to offer or agree to buy, any of the Notes in order to stabilise or maintain the market price of the Notes in Singapore or elsewhere.
These definitions are critical because the exemption will only be available if the dealing activity falls squarely within the defined “stabilising action” and relates to the defined “Notes”. If the notes are different, the issuer is different, the tenor is different, or the stabiliser is not ABN AMRO (or its related corporations), the exemption would not apply.
Section 3: Exemption is the operative provision. It states that Sections 197 and 198 of the SFA shall not apply to stabilising action taken in respect of the Notes within 30 days from the date of issue, with stabilising action undertaken with either:
- (a) a person referred to in section 274 of the Act; or
- (b) a sophisticated investor as defined in section 275(2) of the Act.
In practical terms, Section 3 does two things. First, it removes the application of the SFA’s market conduct provisions (Sections 197 and 198) that would otherwise constrain dealing. Second, it imposes compliance conditions: (i) the stabilising activity must occur within 30 days from the date of issue; and (ii) the counterparties must fall within the specified categories—either those described in section 274 or those who qualify as sophisticated investors under section 275(2).
Although the extract provided does not reproduce the text of Sections 197, 198, 274, and 275, the structure indicates that the SFA’s general rules are being relaxed only for stabilisation and only for dealings with particular types of counterparties. For a practitioner, this means the legal analysis should not stop at “stabilising action” and “within 30 days”; it must also include a counterparty classification exercise under the SFA.
Time-limitation as a compliance trigger. The “within 30 days from the date of issue” requirement is likely the most operationally significant condition. Advisers should ensure that dealing logs, trade confirmations, and settlement timelines are mapped to the “date of issue” concept used for the notes offering. Any stabilising trades outside the window could expose the stabiliser to the underlying SFA market conduct provisions.
Counterparty limitation as a risk control. The exemption is conditional on dealing with persons in section 274 or sophisticated investors. In practice, this requires robust documentation: investor eligibility assessments, representations, and records of the counterparty’s status. If the counterparty is misclassified, the exemption may fail, and the stabilising trades could be treated as prohibited conduct under the SFA.
How Is This Legislation Structured?
This Regulations instrument is concise and structured around three sections:
- Section 1 (Citation and commencement): identifies the Regulations and sets the commencement date.
- Section 2 (Definitions): defines the “Notes” and “stabilising action” so that the exemption is limited to a specific transaction and a specific stabiliser.
- Section 3 (Exemption): provides the legal relief from SFA Sections 197 and 198, but only for stabilising action within 30 days and only when counterparties fall within specified categories.
There are no additional parts or schedules in the extract. The drafting style reflects the nature of subsidiary legislation used to grant transaction-specific exemptions under an enabling provision in the SFA.
Who Does This Legislation Apply To?
The Regulations apply to parties involved in stabilising action in relation to the defined “Notes”. The definition of “stabilising action” narrows the relevant actors to ABN AMRO Bank N.V. and its related corporations. Accordingly, the exemption is not intended for any market participant; it is designed for the stabiliser named in the definition.
In addition, the exemption is conditional on the identity of counterparties. Stabilising action must be taken with a person referred to in section 274 of the SFA or with a sophisticated investor under section 275(2). Therefore, even where ABN AMRO (or a related corporation) conducts stabilising trades, the exemption will only be available if the counterparty eligibility requirements are satisfied.
Why Is This Legislation Important?
For practitioners, the key significance of these Regulations lies in their role as a compliance enabler for stabilisation activities in capital markets. Without such an exemption, stabilising trades could fall within the prohibitions or restrictions in the SFA’s market conduct provisions. This can create legal uncertainty for arrangers, dealers, and stabilising agents during the critical post-issuance period.
At the same time, the Regulations demonstrate the regulator’s approach: stabilisation is permitted, but only under tightly controlled conditions. The narrow definition of the notes, the named stabiliser, the strict 30-day limit, and the counterparty restrictions collectively reduce the risk of abuse and help ensure that stabilisation is used for legitimate market support rather than for improper price influence.
From an enforcement and advisory perspective, the Regulations also highlight the importance of documented eligibility. A lawyer advising on stabilisation should focus on (i) whether the trades are genuinely “stabilising action” as defined; (ii) whether they occur within the permitted timeframe; and (iii) whether counterparties qualify under the SFA categories referenced. These are the points most likely to determine whether the exemption applies.
Related Legislation
- Securities and Futures Act (SFA) (Cap. 289) — in particular:
- Section 337(1) (enabling power for making these Regulations)
- Sections 197 and 198 (market conduct provisions exempted for qualifying stabilising action)
- Section 274 (category of persons for exemption purposes)
- Section 275(2) (definition of “sophisticated investor”)
- Futures Act (mentioned in the legislation metadata context)
- Stabilising Act (mentioned in the legislation metadata context)
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. 13) Regulations 2005 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the official text for authoritative provisions.