Statute Details
- Title: Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Notes) (No. 2) Regulations
- Act Code: SFA2001-RG18
- Legislative Type: Subsidiary Legislation (sl)
- Authorising Act: Securities and Futures Act (Cap. 289), section 337(1)
- Citation: G.N. No. S 38/2004
- Revised Edition: 2004 Rev. Ed. (29th February 2004)
- Made: 27th January 2004
- Status: Current version as at 27 March 2026 (per provided extract)
- 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. 2) Regulations (“the Regulations”) create a targeted exemption from certain market conduct rules in the Securities and Futures Act (SFA). In practical terms, the Regulations allow specified financial institutions to take “stabilising action” in relation to a particular set of notes, without triggering the prohibitions that would otherwise apply to stabilising or related dealings.
The legislation is narrow and product-specific. It does not provide a general licence for stabilisation across all securities. Instead, it identifies a particular issuance of “8.0% Guaranteed Notes due 2009” issued on 27 January 2004 by Excelcomindo Finance Company B.V., guaranteed by PT Excelcomindo Pratama. The exemption is therefore best understood as a regulatory accommodation for a specific capital markets transaction, rather than a broad policy shift.
At a high level, the Regulations recognise that stabilisation—when carried out in a controlled and time-limited manner—may be used to support orderly trading and reduce price volatility during the early period after issuance. However, because stabilisation can also raise concerns about market manipulation, the SFA generally restricts such conduct. These Regulations carve out an exception, but only if strict conditions are met (notably, the identity of counterparties and a 30-day time limit).
What Are the Key Provisions?
1. Definitions (Section 2)
Section 2 defines two critical terms: “Notes” and “stabilising action”. The definition of “Notes” is highly specific. It refers to the “8.0% Guaranteed Notes due 2009” issued on 27 January 2004 by Excelcomindo Finance Company B.V. for a principal amount of up to US$350 million, guaranteed by PT Excelcomindo Pratama. This means the exemption is limited to dealings in those notes; stabilisation in other instruments, even if issued by the same issuer or under the same programme, would not fall within the exemption unless the instrument matches the defined description.
The definition of “stabilising action” is also carefully framed. It means an action taken in Singapore or elsewhere by Credit Suisse First Boston (Europe) Limited, Morgan Stanley & Co. International Limited, or UBS Limited (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. This definition is important for two reasons. First, it restricts the exemption to a named set of stabilising firms (and their related corporations). Second, it covers not only actual purchases but also offers or agreements to buy—so compliance teams must consider contractual commitments, not merely executed trades.
2. Core Exemption (Section 3(1))
Section 3(1) provides the operative exemption. It states that, subject to paragraph (2), sections 197 and 198 of the SFA shall not apply to any stabilising action carried out in respect of the Notes with either:
- (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 plain language, this means that the stabilising firms may undertake stabilisation in the Notes without the SFA’s prohibitions in sections 197 and 198 applying, but only when the stabilising action is carried out with the permitted categories of counterparties. The Regulations therefore embed a counterparty restriction: stabilisation is not intended to be conducted broadly with the general investing public. Instead, it is channelled to specific investor classes recognised by the SFA framework.
For practitioners, the key compliance task is to map the counterparty in each stabilisation transaction to the relevant SFA categories. “Sophisticated investor” is defined in section 275(2) of the SFA, and section 274 identifies another category of persons. Because the exemption is conditional on dealing with those persons, documentation should capture the basis for eligibility (e.g., investor status assessments, confirmations, and record-keeping).
3. Time-Limited Nature of the Exemption (Section 3(2))
Section 3(2) imposes a strict temporal limitation: paragraph (1) does not apply to any 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.
This is a central safeguard. Even if the stabilising firm and the counterparty fall within the permitted categories, stabilisation conducted beyond the 30-day window would fall outside the exemption. Practically, this requires careful trade-date and execution-date controls, as well as monitoring of any offers or agreements to buy that may extend beyond the permitted period. Because the definition includes “offer or agree to buy,” firms should consider whether a commitment made within the 30 days but executed after the expiry could create regulatory risk.
4. Regulatory Effect of the Exemption
While the Regulations do not reproduce sections 197 and 198 of the SFA in the extract, their effect is clear: the exemption prevents those SFA provisions from applying to covered stabilising action. In other words, the Regulations operate as a legal “shield” against the market conduct prohibitions that would otherwise constrain stabilisation. This is not a general permission to stabilise; it is a narrow carve-out that must be satisfied in full—instrument, stabilising firm, counterparty class, and timing.
How Is This Legislation Structured?
The Regulations are structured in a short, functional format typical of targeted exemptions:
- Section 1 (Citation): Provides the short title of the Regulations.
- Section 2 (Definitions): Defines “Notes” and “stabilising action,” which are essential to determine the scope of the exemption.
- Section 3 (Exemption): Sets out the conditions under which sections 197 and 198 of the SFA do not apply, including counterparty categories and the 30-calendar-day limit.
Notably, the Regulations contain no additional procedural requirements in the extract (such as reporting, notice, or record-keeping). However, practitioners should not assume that absence of procedural steps in the Regulations means no obligations elsewhere. Market conduct regimes often require compliance with broader disclosure, reporting, or conduct standards under the SFA and related subsidiary legislation.
Who Does This Legislation Apply To?
The Regulations apply to stabilising action in respect of the defined Notes, when carried out by the specified stabilising firms (Credit Suisse First Boston (Europe) Limited, Morgan Stanley & Co. International Limited, UBS Limited) or their related corporations. The exemption is therefore relevant primarily to investment banks and their corporate groups that may conduct stabilisation activities in Singapore or in other jurisdictions.
However, the exemption also depends on the counterparty. Stabilising action must be carried out with either (i) persons referred to in section 274 of the SFA or (ii) sophisticated investors under section 275(2). As a result, issuers, lead managers, and compliance officers must ensure that stabilisation trades are executed only with eligible counterparties and that investor status is properly evidenced.
Why Is This Legislation Important?
This Regulations is important because it demonstrates how Singapore’s market conduct framework balances two competing objectives: (1) allowing legitimate market support mechanisms during issuance, and (2) preventing manipulation or unfair trading practices. By carving out a limited exemption, the Regulations enable stabilisation in a controlled manner while preserving the general prohibitions under the SFA for conduct that falls outside the defined boundaries.
For legal practitioners advising on capital markets transactions, the Regulations are a reminder that stabilisation is not “free-standing.” It is an activity that must be justified within the statutory architecture. The exemption’s narrow drafting—product-specific notes, named stabilising firms, restricted counterparty classes, and a hard 30-day limit—means that compliance failures can quickly remove the protection of the exemption.
From an enforcement and risk perspective, the time limit is particularly significant. Even where stabilisation is otherwise consistent with market practice, conducting stabilising action after the 30-calendar-day period would likely expose the stabilising firm to the application of sections 197 and 198 of the SFA. Similarly, dealing with ineligible counterparties could negate the exemption even if the stabilisation is otherwise timely and instrument-specific. Therefore, transaction counsel should ensure that stabilisation documentation, trading controls, and investor eligibility checks are aligned with the exemption’s conditions.
Related Legislation
- Securities and Futures Act (Cap. 289): In particular, sections 197, 198, 274, 275(2), and the authorising provision section 337(1).
- Stabilising Act (as referenced in the provided metadata): Relevant to the broader stabilisation framework in Singapore’s regulatory landscape.
- Futures Act (as referenced in the provided metadata): Relevant context for market conduct regulation across financial instruments.
- Timeline / Legislative history: The Regulations were made on 27 January 2004 and revised in the 2004 Revised Edition (29 February 2004).
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. 2) Regulations for legal research and educational purposes. It does not constitute legal advice. Readers should consult the official text for authoritative provisions.