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)
- Legislative Instrument No.: SL 268/2004
- Citation: Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Notes) (No. 16) Regulations 2004
- Commencement: 11 May 2004
- Status: Current version as at 27 Mar 2026 (per the platform 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 under the Securities and Futures Act (SFA). In plain terms, it allows specified parties to take “stabilising action” in relation to a particular bond issuance—without triggering the prohibitions that would otherwise apply.
Stabilising action is a common market practice in securities offerings. When new notes are issued, their price can be volatile. Under certain conditions, market participants may buy (or offer to buy) the securities to help stabilise or maintain the market price. However, stabilisation can overlap with conduct that regulators treat as potentially manipulative. The SFA therefore contains prohibitions (in sections 197 and 198) that generally restrict such conduct.
This set of Regulations carves out an exemption for stabilising action in respect of a specific set of notes: 10-year fixed rate notes due May 2014 issued by Korea Land Corporation, up to a stated principal amount. The exemption is time-limited and applies only when stabilising action is carried out by specified persons or in relation to specified investor categories.
What Are the Key Provisions?
Section 1: Citation and commencement provides the formal name of the Regulations and states that they came into operation on 11 May 2004. For practitioners, this matters when assessing whether stabilising activity occurred within the regulatory window.
Section 2: Definitions is central because the exemption is tightly defined by reference to the type of instrument and the nature of the conduct. Two definitions are particularly important:
- “Notes” means 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” means 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.
These definitions make the exemption highly specific. It is not a general stabilisation regime for any notes; it is an exemption for a particular issuance and for stabilisation conducted by a particular stabilising entity (Citigroup Global Markets Inc. and related corporations).
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 any stabilising action carried out in respect of any of the Notes with either of the following conditions:
- Section 3(1)(a): stabilising action carried out with a person referred to in section 274 of the Act.
- Section 3(1)(b): stabilising action carried out with a sophisticated investor as defined in section 275(2) of the Act.
Although the extract does not reproduce sections 197, 198, 274, and 275, the structure indicates that the exemption is conditioned on the counterparty or the relevant market participant category. In practice, this means stabilising activity is permitted only when it is conducted with the types of persons contemplated by the SFA’s framework—either those falling within the section 274 category or those who qualify as sophisticated investors under section 275(2).
Section 3(2): Time limitation is a further constraint. The exemption does not apply to any stabilising action carried out after the expiry of the period of 30 calendar days from the date of issuance of the Notes. This is a classic stabilisation safeguard: it limits the duration of any price-support activity to a short post-issuance window, reducing the risk of prolonged interference with market pricing.
For counsel advising issuers, arrangers, or stabilising agents, the key compliance tasks are therefore: (1) confirm the notes fall within the defined instrument; (2) confirm the stabilising entity is Citigroup Global Markets Inc. or a related corporation; (3) confirm the counterparties fall within the section 274 category or are sophisticated investors; and (4) ensure stabilising activity ceases within 30 calendar days from issuance.
How Is This Legislation Structured?
The Regulations are short and structured as follows:
- Enacting Formula: states that MAS makes the Regulations under the powers conferred by section 337(1) of the SFA.
- Section 1 (Citation and commencement): identifies the instrument and its commencement date (11 May 2004).
- Section 2 (Definitions): defines “Notes” and “stabilising action” with precision.
- Section 3 (Exemption): sets out the exemption from SFA sections 197 and 198, subject to counterparty conditions and a 30-day time limit.
Because the instrument is only three substantive sections, there is little interpretive complexity in the Regulations themselves. The interpretive work for practitioners will largely involve cross-referencing the SFA provisions referenced in section 3 (sections 197, 198, 274, and 275(2)).
Who Does This Legislation Apply To?
The Regulations apply to stabilising action taken in respect of the defined “Notes” and carried out by the defined stabilising entity. The exemption is not available to any market participant; it is limited to actions by Citigroup Global Markets Inc. or its related corporations. Therefore, the primary regulated actors are the stabilising agent(s) and their related entities that may conduct market purchases or purchase commitments.
In addition, the exemption is conditional on the nature of the counterparty or transaction context. Stabilising action must be carried out with either (i) a person referred to in section 274 of the SFA or (ii) a sophisticated investor under section 275(2). Accordingly, the Regulations indirectly regulate the counterparties and transaction arrangements used for stabilisation, because stabilisation conducted outside these categories would not benefit from the exemption and could attract the prohibitions in sections 197 and 198.
Why Is This Legislation Important?
This instrument is important because it demonstrates how Singapore’s market conduct regime balances two competing policy goals: (1) preventing manipulative or improper market conduct, and (2) permitting legitimate market practices that support orderly trading during the initial distribution period of securities.
From a practitioner’s perspective, the Regulations provide a clear compliance pathway for stabilisation in a specific transaction. Without an exemption, stabilising purchases or purchase commitments could be characterised as conduct prohibited under the SFA’s market conduct provisions. By expressly disapplying sections 197 and 198 (subject to conditions), the Regulations reduce legal uncertainty for stabilising agents and transaction parties.
The practical impact is also significant because stabilisation is time-sensitive and operationally complex. The 30-calendar-day limit from the date of issuance requires robust trade monitoring and governance. Counsel should advise on documentation and controls to evidence: the issuance date, the timing of stabilising trades, the identity of the stabilising entity, and the qualification of counterparties as persons under section 274 or as sophisticated investors under section 275(2).
Finally, the Regulations’ narrow scope (specific notes, specific stabilising entity, and specific counterparty categories) means it should not be treated as a template for other issuances. Each stabilisation scenario may require its own exemption or compliance with a broader stabilisation framework under the SFA and related subsidiary legislation.
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 platform metadata timeline context).
- Stabilising Act (as referenced in the platform metadata timeline context).
- Timeline / Legislation timeline (for version control and amendment history, as indicated by the platform extract).
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.