Statute Details
- Title: Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Notes) (No. 14) Regulations 2004
- Act Code: SFA2001-S224-2004
- Type: Subsidiary Legislation (SL)
- Authorising Act: Securities and Futures Act (SFA) (notably section 337(1))
- Commencement: 23 April 2004
- Enacting instrument date: Made on 21 April 2004
- Legislation number: SL 224/2004
- Status: Current version as at 27 March 2026 (per the provided extract)
- Key provisions: Section 2 (definitions); Section 3 (exemption)
- Relevant SFA provisions referenced: Sections 197, 198, 274, 275(2), 337(1)
What Is This Legislation About?
The Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Notes) (No. 14) Regulations 2004 is a targeted regulatory instrument. In plain terms, it creates a narrow exemption from certain “market conduct” prohibitions in the Securities and Futures Act (SFA) for specific stabilising activities carried out in relation to a particular bond/notes issuance.
Stabilising action is a well-known market practice in securities offerings. When new notes are issued, market liquidity and pricing can be volatile. Under controlled conditions, certain financial institutions may buy (or offer to buy) the securities to stabilise or maintain the market price. However, stabilisation can resemble prohibited conduct such as market manipulation or false/misleading trading practices. The SFA therefore restricts such conduct, but allows exemptions where stabilisation is conducted in a legitimate and regulated manner.
This set of Regulations does not create a general stabilisation regime for all securities. Instead, it is an “exemption for a specific deal” framework: it defines the “Notes” precisely (a particular 7-year fixed rate notes due 2011 issued in May 2004 by Korea Midland Power Co., Ltd.) and defines “stabilising action” as stabilisation-related dealing by specified institutions (Credit Suisse First Boston (Europe) Limited, J.P. Morgan Securities Ltd., or their related corporations). The exemption is also time-limited.
What Are the Key Provisions?
Section 1 (Citation and commencement) provides the short title and confirms that the Regulations come into operation on 23 April 2004. This matters for practitioners because the exemption only becomes available from the commencement date (and, in any event, stabilising action is also constrained by the 30-day post-issuance limit in section 3).
Section 2 (Definitions) is central to understanding the scope. It defines two key terms:
- “Notes” means the 7-year fixed rate notes due 2011 issued by Korea Midland Power Co., Ltd. in May 2004 for a principal amount of up to US$250 million.
- “stabilising action” means an action taken in Singapore or elsewhere by Credit Suisse First Boston (Europe) Limited, J.P. Morgan Securities Ltd., or any of their 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.
For legal analysis, the definitions do significant work. First, they make the exemption deal-specific (only these Notes qualify). Second, they make the exemption participant-specific (only the named institutions and their related corporations qualify). Third, they clarify that stabilisation can occur in Singapore or elsewhere, which is important for cross-border dealing and compliance planning.
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.
In practical terms, this means that stabilising dealers can engage in the defined stabilising activity without triggering the prohibitions contained in SFA sections 197 and 198—but only when the stabilising trades are conducted with the specified categories of counterparties.
Section 3(2) (Time limitation) imposes a critical constraint: the exemption does not apply to stabilising action carried out at any time after the expiry of the 30 calendar days from the date of issuance of the Notes. This is a classic stabilisation safeguard. It ensures that stabilising conduct is confined to the immediate post-issuance period when price discovery and market formation are most sensitive.
For practitioners, the interaction between “date of issuance” and the 30-day window is a compliance focal point. Firms typically document the issuance date precisely (including any relevant settlement/issue mechanics) and implement trading controls to prevent stabilisation beyond the permitted period.
How Is This Legislation Structured?
The Regulations are short and structured as follows:
- Section 1 sets out the citation and commencement.
- Section 2 provides definitions of “Notes” and “stabilising action”.
- Section 3 contains the exemption from SFA sections 197 and 198, including the counterparty conditions and the 30-day time limit.
There are no additional parts or schedules in the extract provided. The instrument is therefore best read as a targeted carve-out rather than a comprehensive stabilisation framework.
Who Does This Legislation Apply To?
Although the Regulations are made under the SFA and therefore sit within a broader regulatory scheme, their practical application is narrow. The exemption is available only to stabilising action that fits the defined parameters in section 2—meaning it is relevant to the specified stabilising dealers (Credit Suisse First Boston (Europe) Limited, J.P. Morgan Securities Ltd., and their related corporations) when they deal in the defined Notes.
Additionally, the exemption is conditional on the counterparty category. Stabilising action must be carried out with either a person referred to in section 274 of the SFA or with a sophisticated investor under section 275(2). This means that even if the stabilising dealer and the Notes match the definitions, the exemption may not apply if the trades are executed with other types of counterparties.
Why Is This Legislation Important?
This Regulations instrument is important because it clarifies when stabilisation—an activity that can be commercially beneficial and market-stabilising—can be conducted without breaching specific SFA market conduct prohibitions. For issuers, lead managers, and trading desks, the exemption reduces legal uncertainty and supports structured execution of stabilisation strategies during the early trading period.
From a compliance perspective, the Regulations highlight two key risk controls: (1) eligibility (the Notes and stabilising participants must match the definitions) and (2) boundaries (trades must be with permitted counterparty categories and must occur within the 30 calendar days after issuance). These are the types of constraints that regulators and internal compliance teams typically require to be evidenced through trade records, approvals, and monitoring.
Finally, the Regulations demonstrate how Singapore’s market conduct regime balances investor protection and market functioning. Rather than prohibiting stabilising activity outright, the SFA framework permits exemptions where stabilisation is limited, defined, and time-bound. For practitioners, this is a useful model when advising on other offerings: exemptions are often deal-specific and require careful mapping of the transaction facts to statutory definitions and conditions.
Related Legislation
- Securities and Futures Act (Cap. 289) — particularly sections 197, 198, 274, 275(2), and 337(1)
- Futures Act (as referenced in the provided metadata)
- Stabilising Act (as referenced in the provided metadata)
- 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. 14) Regulations 2004 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the official text for authoritative provisions.