Statute Details
- Title: Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Notes) (No. 18) Regulations 2004
- Act Code: SFA2001-S278-2004
- Legislation Type: Subsidiary legislation (SL)
- Authorising Act: Securities and Futures Act (SFA) (notably section 337(1))
- Enacting Authority: Monetary Authority of Singapore (MAS)
- Citation: SL 278/2004
- Commencement: 14 May 2004
- Status: Current version as at 27 Mar 2026
- 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. 18) Regulations 2004 (“Stabilising Action Exemption Regulations”) creates a targeted regulatory exemption from certain market conduct prohibitions under the Securities and Futures Act (SFA). In essence, it permits specified “stabilising action” in relation to a particular issuance of convertible notes, without triggering the prohibitions that would otherwise apply to dealings in securities.
Stabilisation is a common feature of securities offerings. When new securities are issued, market prices can be volatile. Under a stabilisation programme, certain market participants may buy (or arrange to buy) the relevant securities for a limited time to help maintain orderly trading and reduce extreme price fluctuations. However, stabilisation can overlap with conduct that market conduct rules seek to prevent—such as manipulation or improper trading practices. This legislation addresses that tension by carving out a controlled exemption.
Importantly, the exemption is narrow and fact-specific. It is not a general stabilisation regime for all securities. Instead, it is tied to a defined set of notes—specifically, the “5-year zero coupon convertible notes due May 2009” issued by SK Telecom Co., Ltd. for up to US$700 million—and to stabilising actions taken by specified financial institutions. The exemption is also time-limited: it does not apply to stabilising action undertaken after a 30-calendar-day period from the date of issuance.
What Are the Key Provisions?
1. Citation and commencement (Regulation 1)
The Regulations may be cited as the “Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Notes) (No. 18) Regulations 2004” and come into operation on 14 May 2004. For practitioners, this matters when assessing whether stabilising conduct occurred within the legal framework that was in force at the relevant time.
2. Definitions (Regulation 2)
The Regulations define two critical terms: “Notes” and “stabilising action”.
“Notes” are defined with precision: they are the 5-year zero coupon convertible notes due May 2009 issued by SK Telecom Co., Ltd. for a principal amount of up to US$700 million. The notes are convertible into either (a) SK Telecom common shares (Won 500 par value) or (b) American Depositary Shares representing those common shares. This definition ensures that the exemption applies only to that particular instrument and its specified conversion mechanics.
“Stabilising action” is defined as an action taken in Singapore or elsewhere by Credit Suisse First Boston (Europe) Limited, Lehman Brothers International (Europe), 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. The definition is therefore both (i) participant-specific (limited to named firms and their related corporations) and (ii) purpose-specific (stabilising or maintaining market price).
3. The exemption from sections 197 and 198 of the SFA (Regulation 3)
The core operative provision is Regulation 3. It provides that, subject to Regulation 3(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 respect to stabilising action carried out in relation to dealings with:
- (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.
Practically, this means the exemption is conditioned on the counterparty category. Stabilising action must be carried out with persons falling within the relevant SFA categories. For counsel advising issuers, arrangers, or stabilisation agents, this is a key compliance point: even if the stabilisation is otherwise within the definition, the exemption may fail if the stabilising trades are executed with the wrong type of counterparty.
4. Time limitation: 30 calendar days from issuance (Regulation 3(2))
Regulation 3(2) imposes a strict temporal boundary. The exemption does not apply to any 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 common feature of stabilisation frameworks: stabilisation is permitted only during an initial period when price discovery is most sensitive. For enforcement risk management, practitioners should ensure that trading records, trade dates, and any “offer or agree to buy” arrangements are monitored so that stabilisation activity does not extend beyond the permitted window.
How Is This Legislation Structured?
The Regulations are short and structured around three provisions:
- Regulation 1 (Citation and commencement): establishes the name of the instrument and its effective date (14 May 2004).
- Regulation 2 (Definitions): defines the scope of “Notes” and “stabilising action,” including the specific issuer, instrument terms, conversion targets, and the stabilisation participants.
- Regulation 3 (Exemption): sets out the exemption from SFA sections 197 and 198, conditioned on counterparty categories and limited to stabilising action within 30 calendar days from issuance.
There are no additional parts or complex schedules in the extract provided. The legal effect is therefore concentrated in Regulation 3, with Regulation 2 doing the essential scoping work.
Who Does This Legislation Apply To?
Although the Regulations are made under the SFA, their practical application is directed at market participants conducting stabilising action in relation to the defined SK Telecom convertible notes. The exemption is available only where stabilising action is taken by Credit Suisse First Boston (Europe) Limited, Lehman Brothers International (Europe), or their related corporations, and where the action falls within the defined purpose of stabilising or maintaining the market price.
In addition, the exemption is conditioned on the type of counterparty involved in the stabilising action. Specifically, stabilising action must be carried out with persons referred to in section 274 of the SFA or with a sophisticated investor as defined in section 275(2). Accordingly, the Regulations indirectly affect issuers and advisers by shaping how stabilisation programmes must be structured to ensure that trades are executed with eligible counterparties.
Why Is This Legislation Important?
This legislation is important because it provides a legal safe harbour for a narrow stabilisation activity that would otherwise risk falling within prohibited market conduct rules. For practitioners, the value lies in the ability to plan and document stabilisation conduct with greater certainty—provided the strict conditions are met.
First, the Regulations demonstrate how Singapore’s market conduct framework can accommodate market-making and stabilisation practices while maintaining investor protection and market integrity. By exempting stabilising action from specific SFA provisions (sections 197 and 198), MAS recognises that stabilisation—when properly constrained—can support orderly trading during the early life of an issuance.
Second, the Regulations highlight compliance “tripwires” that counsel should treat as non-negotiable: (i) the stabilisation must be performed by the named institutions (or their related corporations), (ii) the instrument must be the defined notes, (iii) the trades must be with eligible counterparty categories, and (iv) the activity must occur within the 30-calendar-day window. Missing any one of these elements could mean that the exemption does not apply, exposing the stabilising party to potential regulatory consequences under the underlying SFA prohibitions.
Finally, because the Regulations are instrument-specific (a particular issuer and note terms), they serve as a reminder that stabilisation permissions in Singapore may be implemented through bespoke exemptions rather than a single universal rule. Practitioners should therefore verify whether a stabilisation programme is covered by an exemption regulation (or whether it must rely on other legal mechanisms) before authorising or executing stabilising trades.
Related Legislation
- Securities and Futures Act (SFA) (Cap. 289): including sections 197, 198, 274, 275(2), and the enabling provision 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 materials (for version verification and amendment history).
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. 18) Regulations 2004 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the official text for authoritative provisions.