Statute Details
- Title: Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Notes) (No. 16) Regulations 2005
- Act Code: SFA2001-S307-2005
- Type: Subsidiary Legislation (SL)
- Authorising Act: Securities and Futures Act (Cap. 289)
- Enacting Power: Made under section 337(1) of the Securities and Futures Act
- Commencement: 20 May 2005
- Status: Current version as at 27 Mar 2026 (per the provided extract)
- Key Provisions: Section 1 (Citation and commencement); Section 2 (Definitions); Section 3 (Exemption)
- Relevant Market Conduct Provisions Exempted: Sections 197 and 198 of the Securities and Futures Act
- Notable Defined Terms: “Notes”; “stabilising action”
What Is This Legislation About?
The Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Notes) (No. 16) Regulations 2005 (“Stabilising Action (Notes) Regulations”) is a targeted exemption regulation. In plain terms, it allows certain market participants to engage in stabilising purchases or related dealing activity in connection with a specific issuance of notes, without being caught by particular “market conduct” prohibitions in the Securities and Futures Act (“SFA”).
The regulation is narrow in scope. It does not create a general permission for stabilisation in all note issuances. Instead, it defines a particular instrument—“Notes” meaning 10-year fixed rate notes due May 2015 issued by Korea Highway Corporation up to US$500 million—and it defines stabilising action as activity taken by UBS Limited (and its related corporations) to buy, or offer or agree to buy, those Notes in order to stabilise or maintain their market price in Singapore or elsewhere.
Accordingly, the legal “story” is: the SFA contains rules designed to protect market integrity by restricting certain dealing practices that could distort prices. These Regulations carve out a limited exception for stabilising activity, but only if strict conditions are met—most importantly, the stabilisation must occur within 30 days from the date of issue, and the counterparties must fall within specified categories (persons referenced in section 274 of the SFA, or sophisticated investors as defined in section 275(2) of the SFA).
What Are the Key Provisions?
Section 1: Citation and commencement. This section provides the short title and states that the Regulations come into operation on 20 May 2005. For practitioners, this matters when assessing whether stabilising activity occurred within the legal timeframe for the exemption.
Section 2: Definitions. The Regulations hinge on two defined terms.
(1) “Notes”. The definition is highly specific: it refers to the 10-year fixed rate notes due May 2015 issued by Korea Highway Corporation for a principal amount of up to US$500 million. This means the exemption is instrument-specific. If the stabilising activity relates to different notes (different issuer, maturity, coupon structure, or principal amount beyond the defined scope), the exemption would not apply.
(2) “stabilising action”. The definition limits the actors and the conduct. Stabilising action is an action taken in Singapore or elsewhere by UBS Limited or any of its related corporations, to buy, or offer or agree to buy, any of the Notes to stabilise or maintain the market price of the Notes in Singapore or elsewhere. Practically, this definition captures both actual purchases and certain forward-looking commitments (offers or agreements to buy) that may be relevant to stabilisation strategies.
Notably, the definition is not limited to purchases in the domestic market; it expressly includes stabilisation “in Singapore or elsewhere.” This is important for cross-border dealing and for assessing whether the exemption covers overseas trading activity that affects Singapore market price discovery.
Section 3: Exemption. This is the operative provision. It states that sections 197 and 198 of the Act shall not apply to any stabilising action taken in respect of the Notes, within 30 days from the date of issue, with counterparties that are 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.
For a practitioner, the key analytical tasks are:
- Identify the relevant “Notes” precisely as defined. The exemption is not generic.
- Confirm the actor is UBS Limited or a related corporation, and that the activity falls within the definition of stabilising action (buying, offering to buy, or agreeing to buy for stabilisation purposes).
- Verify the timing: the stabilising action must occur within 30 days from the date of issue. This requires careful documentation of trade dates and the issue date.
- Confirm the counterparty category: the exemption is limited to dealings with persons in section 274 or sophisticated investors under section 275(2). This introduces a counterparty due diligence component—firms must be able to evidence that counterparties meet the statutory categories.
Although the extract does not reproduce sections 197 and 198 themselves, the structure indicates that those sections impose restrictions that would otherwise apply to stabilising conduct. The Regulations therefore function as a statutory “safe harbour” (or more accurately, an exemption) for specified stabilisation activity, reducing compliance risk for permitted stabilisation strategies.
How Is This Legislation Structured?
The Regulations are extremely short and consist of three sections:
- Section 1 sets out the citation and commencement.
- Section 2 provides definitions that narrow the scope to a specific note issuance and a specific stabilisation actor and conduct.
- Section 3 creates the exemption from the application of specified SFA provisions (sections 197 and 198), subject to timing and counterparty conditions.
There are no additional parts, schedules, or procedural requirements in the provided text. The legal effect is therefore achieved entirely through the defined scope and the exemption conditions in section 3.
Who Does This Legislation Apply To?
In practical terms, the Regulations apply to UBS Limited and its related corporations when they undertake stabilising action in relation to the defined “Notes.” The exemption is not available to other dealers or issuers unless they fall within the defined stabilising actor category (UBS Limited or related corporations).
Additionally, the exemption is conditional on the counterparty being within the permitted categories: persons referenced in section 274 of the SFA or sophisticated investors under section 275(2). This means that even where the stabiliser is UBS (or a related corporation), the exemption may not apply if stabilising trades are executed with retail or other non-qualifying counterparties.
Why Is This Legislation Important?
These Regulations matter because they address a recurring market practice: price stabilisation in connection with securities offerings. Stabilisation can support orderly trading and reduce volatility immediately after issuance. However, without regulatory boundaries, stabilisation can also be misused to create artificial price movements. The SFA’s market conduct provisions (including sections 197 and 198) are designed to protect market integrity; these Regulations provide a controlled exception.
For legal practitioners advising financial institutions, the value of this legislation lies in its precision. It demonstrates how Singapore law can permit stabilisation while still imposing guardrails: (i) a defined instrument, (ii) a defined stabilising actor, (iii) a defined stabilisation conduct, (iv) a strict time window (30 days from issue), and (v) restricted counterparty categories. This combination reduces ambiguity and supports compliance planning.
From an enforcement and risk perspective, the exemption also affects how regulators and counterparties may assess conduct. If stabilising activity falls outside the exemption—e.g., beyond the 30-day period, involving different notes, undertaken by a non-qualifying entity, or executed with non-qualifying counterparties—then the stabiliser may face exposure under the underlying SFA provisions. Therefore, firms should treat the exemption as conditional and evidence-driven, requiring robust trade records, issue-date calculations, and counterparty classification documentation.
Related Legislation
- Securities and Futures Act (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 context)
- Stabilising Act (as referenced in the provided metadata context)
- Timeline (legislation timeline reference for version control)
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 2005 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the official text for authoritative provisions.