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
- Type: Subsidiary Legislation (sl)
- Authorising Act: Securities and Futures Act (Cap. 289)
- Enacting Power: Section 337(1) of the Securities and Futures Act
- Commencement: 14 May 2004
- Regulation No.: SL 278/2004
- Status (as provided): Current version as at 27 Mar 2026
- Key Provisions: Regulation 1 (Citation and commencement); Regulation 2 (Definitions); Regulation 3 (Exemption)
- Primary Legal Effect: Exempts certain “stabilising action” in relation to specified notes from the prohibitions in sections 197 and 198 of the Securities and Futures Act, subject to conditions
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 is a targeted regulatory instrument. In plain terms, it creates a limited exemption from certain market conduct rules in the Securities and Futures Act for specific trading activity—namely, “stabilising action”—carried out in connection with a particular issuance of convertible notes.
Stabilising action is a practice used in securities offerings to help manage short-term price volatility after issuance. Market participants may buy (or offer to buy) the relevant securities for the purpose of stabilising or maintaining the market price. However, stabilising activity can also resemble prohibited conduct if it is not clearly authorised and constrained. This Regulations addresses that tension by carving out an exemption, but only for stabilising actions meeting the defined scope and timing requirements.
Importantly, the exemption is not general. The Regulations defines the “Notes” very specifically as the 5-year zero coupon convertible notes due May 2009 issued by SK Telecom Co., Ltd. for up to US$700 million, and it defines the stabilising actors and the nature of their actions. This means the exemption is designed for a particular transaction and is not intended to permit stabilisation for other issuances or by other parties.
What Are the Key Provisions?
Regulation 1 (Citation and commencement) provides the short title and confirms that the Regulations came into operation on 14 May 2004. For practitioners, this matters because the exemption only becomes available from the commencement date, and the timing condition in Regulation 3(2) is calculated by reference to the “date of the issuance of the Notes”.
Regulation 2 (Definitions) is central to understanding the scope. It defines two key terms:
- “Notes” means 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) common shares of SK Telecom Co., Ltd. (par value Won 500 each) or (b) American Depositary Shares representing common shares (par value Won 500 each).
- “stabilising action” means an action taken in Singapore or elsewhere by specified entities—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.
From a compliance perspective, the definitions do most of the work. If the instrument is not the specified SK Telecom notes, or if the stabilising activity is not carried out by the specified firms (or their related corporations), the exemption will not apply. Likewise, the action must be directed at stabilising or maintaining market price; ordinary trading or liquidity provision not connected to stabilisation would fall outside the definition.
Regulation 3 (Exemption) sets out the operative legal effect. The exemption is framed as follows:
- Regulation 3(1): Subject to paragraph (2), sections 197 and 198 of the Securities and Futures Act shall not apply to any 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.
- Regulation 3(2): The exemption does not apply to stabilising action carried out at any time after the expiry of the period of 30 calendar days from the date of issuance of the Notes.
Practically, this means two cumulative constraints: (1) the stabilising action must be carried out with the right counterparty category (either a section 274 person or a sophisticated investor), and (2) it must occur within a strict 30-calendar-day window after issuance. After that period, the stabilising activity would revert to the general rule—sections 197 and 198 would apply, and the conduct could become unlawful unless another exemption or defence is available.
Although the extract does not reproduce sections 197 and 198 or sections 274 and 275, the structure indicates that those provisions likely regulate market conduct and/or dealing restrictions that could capture stabilising trades. The Regulations therefore functions as a transaction-specific “safe harbour” for stabilising activity, but only within the defined parameters.
How Is This Legislation Structured?
The Regulations are short and comprise three substantive provisions:
- Regulation 1 (Citation and commencement) — identifies the instrument and its start date.
- Regulation 2 (Definitions) — defines “Notes” and “stabilising action” with transaction-specific precision, including the issuer, instrument type, conversion mechanics, and the stabilising firms.
- Regulation 3 (Exemption) — provides the exemption from the application of specified Securities and Futures Act sections, subject to counterparty categories and a 30-day post-issuance limit.
There are no additional parts or complex schedules in the extract provided. The drafting is deliberately compact, reflecting the nature of subsidiary legislation used to grant narrow exemptions for particular market events.
Who Does This Legislation Apply To?
This Regulations applies to stabilising actions in relation to the defined SK Telecom convertible notes due May 2009 and only when those actions are carried out by the defined stabilising entities—Credit Suisse First Boston (Europe) Limited, Lehman Brothers International (Europe), or their related corporations—acting in Singapore or elsewhere to stabilise or maintain the market price of the Notes.
Even where the stabilising actor and the instrument match, the exemption is further limited by the counterparty requirement in Regulation 3(1). The stabilising action must be carried out with either (a) a person referred to in section 274 of the Securities and Futures Act, or (b) a sophisticated investor under section 275(2). Accordingly, the exemption is not simply about who trades; it is also about who the trades are with.
Finally, the exemption is time-limited. If stabilising action occurs outside the 30 calendar days after the date of issuance, the exemption ceases to apply, and the general market conduct provisions in sections 197 and 198 would be expected to govern.
Why Is This Legislation Important?
For practitioners advising issuers, arrangers, and dealer groups, this Regulations is important because it provides a narrowly tailored compliance pathway for stabilisation activities. Without such an exemption, stabilising trades could be captured by general prohibitions or restrictions in the Securities and Futures Act, creating legal risk for dealers and potentially undermining the offering’s market support strategy.
The Regulations also illustrates how Singapore’s market conduct framework balances market integrity with practical market-making needs. Stabilisation can be legitimate and beneficial in the immediate post-issuance period, but it must be constrained to prevent manipulation. The two key constraints—(1) limited counterparty categories and (2) a strict 30-day limit—are the mechanisms by which the exemption is controlled.
From an enforcement and risk-management perspective, the time limit is likely the most operationally sensitive. Dealers typically plan stabilisation programmes with defined commencement and termination dates. This Regulations requires careful calculation from the “date of issuance” and mandates cessation after the 30th calendar day. Any continuation, even if commercially motivated, could expose the stabilising parties to regulatory action if sections 197 and 198 apply.
Additionally, the transaction-specific definitions mean that counsel must verify the instrument’s identity (including conversion features) and the stabilising entities’ status (including whether a relevant entity qualifies as a “related corporation” of the named firms). Where corporate structures are complex, documentation and legal analysis may be necessary to confirm eligibility.
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)
- Stabilising Act (as referenced in the provided metadata)
- Timeline / Legislation timeline (for version control 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.