Statute Details
- Title: Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Notes) (No. 18) Regulations 2005
- Act Code: SFA2001-S355-2005
- Legislation Type: Subsidiary Legislation (SL)
- Authorising Act: Securities and Futures Act (Cap. 289)
- Enacting Authority: Monetary Authority of Singapore (MAS)
- Commencement: 10 June 2005
- Key Provisions: Section 2 (definitions); Section 3 (exemption)
- Regulation Number: SL 355/2005
- Status: Current version as at 27 March 2026 (per the legislation portal)
What Is This Legislation About?
The Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Notes) (No. 18) Regulations 2005 (“Stabilising Action Exemption Regulations”) is a targeted regulatory instrument. In essence, it creates a narrow exemption from certain market conduct rules under the Securities and Futures Act (the “SFA”) for stabilising transactions involving a specific class of debt securities (“Notes”).
Stabilising action is a familiar concept in capital markets. When new securities are issued, market participants may take limited steps—within prescribed timeframes—to support or maintain the trading price in the immediate aftermath of issuance. This can help reduce volatility and improve the initial liquidity of the instrument. However, stabilising conduct can also resemble prohibited market manipulation if it is not carefully constrained. Accordingly, the SFA contains provisions that regulate or restrict conduct that could distort market prices.
This subsidiary legislation addresses that tension by carving out a permitted pathway for stabilising activity, but only for a defined set of Notes and only for a limited period after issuance. It also restricts the persons who may benefit from the exemption to categories specified by reference to the SFA (including “sophisticated investors” and persons referred to in the relevant SFA provision).
What Are the Key Provisions?
1. Citation and commencement (Regulation 1)
Regulation 1 provides the short title and the commencement date. 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 2005” and come into operation on 10 June 2005. For practitioners, this matters because the exemption is time-bound and must be assessed against the issuance date and the 30-day window in Regulation 3.
2. Definitions (Regulation 2)
Regulation 2 is crucial because it defines both the instrument and the conduct that may qualify for the exemption.
“Notes” are defined very specifically as the 10-year lower tier II subordinated notes due June 2015 issued by Korea Exchange Bank for a principal amount of up to US$500 million. This specificity indicates that the exemption is not a general stabilisation regime; it is an instrument-specific exemption.
“Stabilising action” is defined as an action taken in Singapore or elsewhere by The Hongkong and Shanghai Banking Corporation Limited (HSBC) or any of its related corporations. The action must involve buying, or offering or agreeing to buy, any of the Notes in order to stabilise or maintain the market price of the Notes in Singapore or elsewhere. The definition therefore ties the exemption to (i) the identity of the stabilising actor (HSBC group), (ii) the nature of the transaction (buying or offering to buy), and (iii) the purpose (stabilisation/price maintenance).
3. The exemption from SFA sections 197 and 198 (Regulation 3)
Regulation 3 is the operative provision. It states that Sections 197 and 198 of the Act shall not apply to stabilising action taken in respect of any of the Notes, within 30 days from the date of issue, with respect to stabilising action taken by or involving:
- (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.
In practical terms, this means that the stabilising conduct—if it falls within the defined scope of “stabilising action” and is carried out within the 30-day post-issuance period—will be treated as outside the reach of the SFA’s market conduct restrictions contained in sections 197 and 198, but only where the stabilising action is taken in relation to the specified categories of persons.
Why the 30-day window matters
The exemption is expressly limited to stabilising action “within 30 days from the date of issue of the Notes.” For compliance and legal review, this requires careful documentation of: (i) the issuance date; (ii) the dates of stabilising trades or offers; and (iii) whether any activity occurred outside the window. Even if the conduct is otherwise consistent with stabilisation, the exemption would not apply if the timing requirement is not met.
Why the person categories matter
Regulation 3 does not simply exempt “HSBC stabilising the Notes.” Instead, it exempts stabilising action from the specified SFA sections when the stabilising action is taken “with” a person in one of the two categories. This is a compliance-critical drafting choice: it implies that the exemption is conditional on the counterparty or relevant participant being within the SFA-defined categories. Practitioners should therefore read Regulation 3 together with the referenced SFA provisions (sections 274 and 275(2)) to confirm the precise meaning of “a person referred to” and the criteria for “sophisticated investor.”
How Is This Legislation Structured?
The Regulations are concise and consist of three main provisions:
- Regulation 1 (Citation and commencement): sets the short title and commencement date (10 June 2005).
- Regulation 2 (Definitions): defines “Notes” and “stabilising action,” thereby limiting the exemption to a particular issuance and a particular stabilising actor and purpose.
- Regulation 3 (Exemption): provides the legal exemption from SFA sections 197 and 198, limited by time (30 days from issue) and by the relevant person categories (section 274 persons or sophisticated investors under section 275(2)).
There are no additional parts or schedules in the extract provided, reflecting the Regulations’ function as a targeted carve-out rather than a comprehensive market conduct framework.
Who Does This Legislation Apply To?
Although the Regulations are made under the SFA and refer to stabilising action taken by HSBC (and related corporations), the exemption is not framed as a general permission for any market participant. Instead, it applies to stabilising action in respect of the defined Notes, taken by the defined stabilising actor (HSBC group) and conducted within the defined timeframe.
Further, Regulation 3 conditions the exemption on the involvement of persons falling within the SFA categories: either (i) persons referred to in section 274 of the SFA, or (ii) sophisticated investors as defined in section 275(2). For lawyers advising issuers, arrangers, dealers, or investors, the key question is therefore not only “is the conduct stabilisation?” but also “is the relevant counterparty/participant within the SFA-defined categories that trigger the exemption?”
Why Is This Legislation Important?
This Regulations’ importance lies in how it balances two competing regulatory objectives: enabling orderly market functioning during the post-issuance period, while preserving the integrity of market prices by limiting conduct that could otherwise be characterised as prohibited market manipulation.
From a practitioner’s perspective, the exemption is valuable because it provides legal certainty for stabilising activity. Without such an exemption, stabilising trades could potentially be caught by the SFA market conduct provisions (sections 197 and 198), creating enforcement risk and uncertainty for underwriting syndicates and dealers. By specifying the Notes, the stabilising actor, the purpose, and the time window, the Regulations reduce ambiguity and allow market participants to structure stabilisation activities within a defined legal perimeter.
However, the Regulations are also a reminder that exemptions are rarely “blanket.” Here, the exemption is tightly scoped: it applies only to a particular issuance of Korea Exchange Bank’s 10-year lower tier II subordinated notes, only to stabilising actions taken by HSBC group, and only within 30 days from issuance, and only where the relevant persons are within the SFA-defined categories. Practitioners should therefore treat the exemption as a compliance checklist item rather than a general market practice permission.
In practical deal terms, lawyers should ensure that stabilisation documentation, trade blotters, and internal approvals reflect the exemption’s conditions. This includes confirming the issuance date, tracking the 30-day period, confirming the identity of the stabilising entity, and verifying that the relevant counterparties or participants qualify under section 274 or the “sophisticated investor” definition in section 275(2). Where these conditions are not met, the stabilising activity may remain subject to the SFA provisions that the exemption otherwise disapplies.
Related Legislation
- Securities and Futures Act (Cap. 289) — particularly sections 197, 198, 274, and 275(2) (as referenced by the Regulations)
- Futures Act (noting the portal references “Futures Act” in the metadata)
- Stabilising Act (noting the portal references “Stabilising Act” in the metadata)
- 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 2005 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the official text for authoritative provisions.