Statute Details
- Title: Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Notes) (No. 16) Regulations 2004
- Act Code: SFA2001-S268-2004
- Type: Subsidiary Legislation (SL)
- Authorising Act: Securities and Futures Act (SFA), specifically section 337(1)
- Commencement: 11 May 2004
- Legislation Number: SL 268/2004
- Status: Current version as at 27 Mar 2026 (per provided extract)
- 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. 16) Regulations 2004 is a targeted regulatory instrument that creates a narrow exemption from certain market conduct rules in the Securities and Futures Act (SFA). In plain language, it allows specified persons to take “stabilising action” in relation to a particular bond issuance—without triggering the prohibitions that would otherwise apply.
Stabilisation is a common market practice in securities offerings. When new notes are issued, their price may fluctuate sharply due to initial trading dynamics. Market participants involved in the issuance may therefore conduct limited buying or related activities to help maintain an orderly market and prevent excessive price volatility. However, stabilisation can resemble prohibited conduct if it is not carefully bounded and authorised. This Regulations addresses that tension by carving out a lawful pathway for stabilising activities, but only for a defined set of notes, actors, and timeframes.
Importantly, the exemption is not general. It is tied to a specific instrument: “the 10-year fixed rate notes due May 2014” issued by Korea Land Corporation, up to a stated principal amount. It is also tied to a specific stabilising actor: Citigroup Global Markets Inc. (and its related corporations). Finally, it is time-limited: stabilising action is exempt only if carried out within 30 calendar days from the date of issuance.
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 11 May 2004. For practitioners, this matters when assessing whether stabilising conduct occurred within the regulatory framework and whether any enforcement analysis would consider the exemption available at the relevant time.
Section 2 (Definitions) is central because the exemption depends entirely on whether the activity and the instrument fall within the defined terms. The Regulations define:
- “Notes”: the 10-year fixed rate notes due May 2014 issued by Korea Land Corporation for a principal amount of up to US$750 million.
- “Stabilising action”: an action taken in Singapore or elsewhere by Citigroup Global Markets Inc. (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.
Two practical points follow from these definitions. First, the exemption is geographically broad (“in Singapore or elsewhere”), meaning stabilisation conducted outside Singapore can still be relevant if it is intended to stabilise the market price of the Notes in Singapore or elsewhere. Second, the definition includes not only actual purchases but also offers and agreements to buy—so compliance teams must consider whether pre-trade commitments or conditional arrangements could fall within “stabilising action”.
Section 3 (Exemption) is the operative provision. Section 3(1) states 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 person referred to in section 274 of the Act, or
- a sophisticated investor as defined in section 275(2) of the Act.
While the extract does not reproduce sections 197, 198, 274, and 275, the structure indicates that the SFA contains market conduct prohibitions (sections 197 and 198) that would otherwise restrict certain dealings or trading-related behaviour. The exemption removes those prohibitions for stabilising action, but only when the stabilising dealings are carried out with the specified categories of counterparties—namely persons within section 274 or sophisticated investors under section 275(2).
Section 3(2) (Time limitation) imposes a critical boundary: 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 stabilisation is a short-term market support mechanism rather than an ongoing trading strategy that could distort price discovery beyond the initial issuance period.
For legal practitioners, the time limitation is often the most litigated or compliance-sensitive element. The phrase “after the expiry of the period of 30 calendar days from the date of the issuance” requires careful determination of the “date of issuance” and counting methodology (including whether the issuance date is day 0 or day 1 in practice). Even if the stabilising activity is otherwise within the defined actor and instrument, conduct outside the 30-day window would fall back into the general SFA prohibitions.
How Is This Legislation Structured?
This Regulations is concise and structured as a short instrument with three sections:
- Section 1 sets out the citation and commencement date.
- Section 2 provides definitions that determine the scope of the exemption—particularly the meaning of “Notes” and “stabilising action”.
- Section 3 contains the exemption from specified SFA provisions, subject to counterparty conditions (section 3(1)) and a strict time limit (section 3(2)).
Notably, the Regulations does not create detailed procedural requirements (such as reporting, disclosure, or record-keeping) within the extract provided. Instead, it operates by removing the applicability of particular SFA sections to stabilising action that fits the defined parameters. In practice, however, firms should still consider whether other SFA provisions, MAS notices, or general market conduct requirements apply alongside this exemption.
Who Does This Legislation Apply To?
The exemption is designed for a specific stabilisation scenario. It applies to stabilising action carried out by Citigroup Global Markets Inc. or its related corporations in relation to the defined Korea Land Corporation notes. Therefore, it is not a general permission for any market participant; it is actor-specific through the definition of “stabilising action”.
Additionally, even where the actor and the notes match, the exemption in section 3(1) is conditional on the stabilising action being carried out with either (i) a person referred to in section 274 of the SFA or (ii) a sophisticated investor as defined in section 275(2). This means counterparties matter. A compliance review should therefore confirm not only the identity of the stabilising firm but also the classification of the counterparty involved in the stabilising dealings.
Why Is This Legislation Important?
This Regulations is important because it demonstrates how Singapore law balances two competing objectives: (1) maintaining fair and orderly markets through prohibitions on certain market conduct, and (2) allowing legitimate underwriting and stabilisation practices that support successful issuance of securities. By exempting stabilising action from sections 197 and 198 of the SFA, the Regulations provides legal certainty for stabilisation activities that would otherwise be vulnerable to enforcement risk.
For practitioners advising issuers, arrangers, and dealers, the Regulations offers a concrete compliance framework. It clarifies that stabilisation is permissible only when it fits within defined boundaries: the specific notes, the specific stabilising actor, the permitted counterparty categories, and the 30-day post-issuance window. This reduces ambiguity and helps firms design stabilisation programmes that are defensible if questioned by regulators or counterparties.
From an enforcement perspective, the time limit and counterparty conditions create clear “bright line” constraints. Regulators can assess quickly whether stabilising activity occurred after the 30-day period or whether the counterparties were outside the categories contemplated by the SFA. Consequently, the Regulations is not merely a technical exemption; it is a compliance tool that shapes trading conduct during a sensitive period following issuance.
Related Legislation
- Securities and Futures Act (SFA) (Cap. 289) — in particular 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)
- 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. 16) Regulations 2004 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the official text for authoritative provisions.