Statute Details
- Title: Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Notes) (No. 19) Regulations 2004
- Act Code: SFA2001-S285-2004
- Type: Subsidiary Legislation (SL)
- Authorising Act: Securities and Futures Act (SFA), specifically section 337(1)
- Commencement: 17 May 2004
- Legislative Status: Current version as at 27 Mar 2026 (per the provided extract)
- Legislation Number: SL 285/2004
- 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. 19) Regulations 2004 is a targeted exemption regulation made under the Securities and Futures Act (SFA). In plain terms, it allows certain market participants to take “stabilising action” in relation to a specific set of debt securities—namely, particular guaranteed fixed rate notes—without being treated as breaching certain market conduct rules.
Stabilising action is a practice commonly used in securities offerings to help manage short-term price volatility after issuance. In many jurisdictions, stabilisation is permitted only under tightly defined conditions, because stabilisation can otherwise resemble improper trading or market manipulation. This regulation therefore creates a narrow carve-out from the SFA’s prohibitions on specified market conduct conduct (identified in the regulation as sections 197 and 198 of the Act), but only for stabilising action that meets the regulation’s definitions and timing limits.
Importantly, the exemption is not general. It is tied to (i) a defined instrument (“Notes”) and (ii) a defined actor and conduct (“stabilising action” by UBS Limited or its related corporations). It also limits the exemption to stabilising action carried out within a specific post-issuance window of 30 calendar days.
What Are the Key Provisions?
Section 1 (Citation and commencement) provides the short title and states that the Regulations come into operation on 17 May 2004. For practitioners, this matters when assessing whether stabilising activity occurred within the legal framework available at the time.
Section 2 (Definitions) is the heart of the regulation’s scope. It defines two critical terms:
- “Notes” means the 10-year guaranteed fixed rate notes due May 2014 issued by Jardine Matheson Finance Company Limited for a principal amount of up to US$300 million, guaranteed by Jardine Matheson Holdings Limited.
- “stabilising action” means an action taken in Singapore or elsewhere by UBS Limited (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 are deliberately narrow. They ensure that the exemption is available only for stabilisation of the specified notes and only when undertaken by UBS Limited or its related corporations. If a different issuer, different notes, or a different stabilising firm is involved, the exemption would not apply.
Section 3 (Exemption) sets out the legal effect. Section 3(1) provides that, subject to paragraph (2), sections 197 and 198 of the SFA shall not apply to stabilising action carried out in respect of any of the Notes with respect to stabilising action carried out:
- with a person referred to in section 274 of the Act; or
- with a sophisticated investor as defined in section 275(2) of the Act.
In practical terms, sections 197 and 198 of the SFA are the provisions that would otherwise restrict or prohibit certain market conduct. While the extract does not reproduce those sections, the exemption’s structure indicates that the SFA’s market conduct prohibitions would otherwise capture stabilising trades or related dealings. This regulation removes that risk for stabilising action that is conducted with the specified categories of counterparties.
Section 3(2) (Timing limitation) is a further constraint: the exemption does not apply to stabilising action carried out at any time after the expiry of 30 calendar days from the date of issuance of the Notes. This is a classic stabilisation safeguard: stabilisation is permitted only in the immediate aftermath of issuance, when price discovery is still forming and when stabilisation is most likely to be justified as a market-support mechanism rather than a prolonged trading strategy.
For counsel advising on compliance, the timing requirement is often operationalised through documentation and trade monitoring: firms typically maintain records of the issuance date, calculate the 30-day window precisely (including weekends and public holidays, since the regulation uses “calendar days”), and ensure that any stabilising orders or trades after the window are treated as potentially non-exempt and therefore subject to the SFA prohibitions.
How Is This Legislation Structured?
This regulation is short and consists of an enacting formula and three substantive provisions:
- Section 1 – Citation and commencement (17 May 2004).
- Section 2 – Definitions of “Notes” and “stabilising action”.
- Section 3 – The exemption from the application of SFA sections 197 and 198, subject to (i) the counterparty categories and (ii) the 30-calendar-day limit.
There are no additional parts, schedules, or procedural requirements in the extract. The regulation’s design is therefore “scope-first”: it defines the instrument and stabiliser, then grants a limited exemption with clear boundaries.
Who Does This Legislation Apply To?
The exemption is directed at stabilising activity in relation to the defined “Notes”. Although the regulation is not drafted as a general compliance code for all market participants, it effectively applies to UBS Limited (and its related corporations) when they undertake stabilising action as defined. Because the exemption is tied to the stabiliser and the notes, other dealers or arrangers would not benefit from this particular exemption unless they fall within the definition of “stabilising action” (i.e., they are UBS Limited or its related corporations) and the activity is in respect of the specified notes.
Additionally, the exemption is conditional on the counterparty category. Stabilising action must be carried out “with” either (a) a person referred to in section 274 of the SFA or (b) a sophisticated investor under section 275(2). This means that even where the stabiliser and notes match, the exemption could be unavailable if the stabilising trades are executed with other types of counterparties not covered by those SFA definitions.
Why Is This Legislation Important?
For practitioners, the significance of this regulation lies in its role as a legal risk-management tool for stabilisation strategies. Stabilising trades can be scrutinised under market conduct rules because they may affect price formation. By carving out stabilising action from the application of SFA sections 197 and 198, the regulation provides a pathway for authorised or market-practice stabilisation to occur without triggering the prohibitions that would otherwise apply.
However, the exemption is narrow and conditional. It is limited to a specific debt issuance (the Jardine Matheson guaranteed notes), a specific stabiliser (UBS Limited and related corporations), specific counterparties (section 274 persons or sophisticated investors), and a strict 30-calendar-day post-issuance period. This means that compliance teams must treat the exemption as a checklist exercise rather than a blanket permission.
In practice, counsel advising issuers, arrangers, or stabilising banks should focus on four compliance questions:
- Instrument match: Are the trades in the defined “Notes”?
- Actor match: Is the stabilising action taken by UBS Limited or its related corporations?
- Counterparty match: Are the counterparties within section 274 or sophisticated investors under section 275(2)?
- Timing match: Are the stabilising trades within 30 calendar days from the issuance date?
Failure on any of these points could mean the stabilising action is not exempt and therefore may fall within the prohibitions in sections 197 and 198 of the SFA. That exposure can be material, particularly where stabilisation is used in connection with marketing, pricing, and post-issuance trading strategies.
Related Legislation
- Securities and Futures Act (SFA) (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)
- 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. 19) Regulations 2004 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the official text for authoritative provisions.