Statute Details
- Title: Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Notes) (No. 2) Regulations 2005
- Act Code: SFA2001-S40-2005
- Type: Subsidiary Legislation (SL)
- Authorising Act: Securities and Futures Act (Cap. 289) — powers under section 337(1)
- Commencement: 20 January 2005
- Enacting date: Made on 17 January 2005
- Legislative status: Current version as at 27 March 2026
- Key provisions: Section 2 (definitions); Section 3 (exemption)
- Primary legal effect: Exempts specified “stabilising action” in relation to specified “Notes” from the prohibitions in sections 197 and 198 of the Securities and Futures Act
What Is This Legislation About?
The Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Notes) (No. 2) Regulations 2005 is a targeted regulatory instrument. In plain terms, it creates a narrow exemption that allows certain market participants to take “stabilising action” when dealing in a particular set of debt securities—“Notes”—without breaching the general market conduct rules that would otherwise apply.
In Singapore’s market conduct framework, the Securities and Futures Act (the “SFA”) contains provisions designed to prevent manipulative or misleading trading practices. Among these are prohibitions that can capture conduct that artificially supports prices or creates an impression of active trading. However, stabilisation practices are sometimes permitted in regulated circumstances because they may serve legitimate functions in the immediate aftermath of issuance—such as reducing volatility and supporting orderly trading.
This particular set of Regulations is not a general stabilisation regime for all securities. Instead, it is a bespoke exemption tied to a specific issuance: the “7-year guaranteed fixed rate notes due January 2012” issued by URC Philippines, Limited and guaranteed by Universal Robina Corporation. The exemption is also time-limited and participant-limited, reflecting the regulator’s intent to permit stabilisation only where it is closely controlled and transparent.
What Are the Key Provisions?
Section 1 (Citation and commencement) provides the formal name of the Regulations and states that they come into operation on 20 January 2005. For practitioners, this matters because the exemption only becomes available from the commencement date, and stabilising activity must be assessed against the timing of the issuance and the statutory window.
Section 2 (Definitions) is critical because the exemption turns entirely on whether the conduct falls within the defined terms. Two definitions drive the scope:
- “Notes” are defined very specifically as the 7-year guaranteed fixed rate notes due January 2012 issued by URC Philippines, Limited for up to US$200 million, guaranteed by Universal Robina Corporation. This means the exemption is not available for other notes, other issuers, or other maturities—even if the structure is similar.
- “Stabilising action” is defined as an action taken in Singapore or elsewhere by Credit Suisse First Boston (Europe) 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. The definition is both purpose-based (stabilise/maintain price) and participant-based (Credit Suisse First Boston (Europe) Limited and related corporations).
Section 3 (Exemption) is the operative provision. It states that sections 197 and 198 of the SFA 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 undertaken by 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.
Although the extract does not reproduce sections 197, 198, 274, or 275, the practitioner’s takeaway is clear: the exemption is conditional on who is doing the stabilising and when it is done. The Regulations do not create an open-ended permission for any dealer or any investor. Instead, they carve out a controlled exception for stabilisation activity carried out by specified categories of persons (or sophisticated investors) within a defined post-issuance period.
In practice, the “within 30 days from the date of issue” condition is likely to be the most litigable or compliance-sensitive element. Market conduct investigations often focus on whether the conduct occurred inside or outside the permitted window. The exemption therefore requires careful documentation of the issuance date, the timing of trades (including offers or agreements to buy), and the identity and status of the stabilising party.
How Is This Legislation Structured?
The Regulations are short and structured around three provisions:
- Section 1 sets out the citation and commencement.
- Section 2 provides definitions that confine the exemption to particular notes and particular stabilising actors and conduct.
- Section 3 provides the exemption from the application of specified SFA market conduct provisions (sections 197 and 198), subject to time (30 days from issue) and person (persons under section 274 or sophisticated investors under section 275(2)).
From a drafting and compliance perspective, the Regulations exemplify a common approach in Singapore market conduct regulation: rather than rewriting the general prohibitions, the subsidiary legislation creates a narrow carve-out where the regulator is satisfied that stabilisation is appropriate and sufficiently constrained.
Who Does This Legislation Apply To?
Although the Regulations are made under the SFA and refer to categories of persons within the Act, their practical application is limited. The exemption is available only for stabilising action as defined—i.e., actions taken in Singapore or elsewhere by Credit Suisse First Boston (Europe) Limited or its related corporations to buy or agree to buy the defined Notes for the purpose of stabilising or maintaining market price.
Even where the stabilising actor matches the definition, Section 3 further restricts the exemption to stabilising action undertaken within 30 days from the date of issue and carried out with respect to the Notes by either a person referred to in section 274 of the SFA or a sophisticated investor under section 275(2). Accordingly, the exemption is best understood as applying to a specific stabilisation arrangement around a specific issuance, rather than to all market participants.
Why Is This Legislation Important?
This Regulations matters because it clarifies when stabilisation conduct—often scrutinised under market manipulation and market conduct rules—can be undertaken without triggering the prohibitions in sections 197 and 198 of the SFA. For issuers, arrangers, and dealers, the ability to stabilise within a controlled period can be commercially significant. It can support orderly trading and reduce the risk of abrupt price swings immediately after issuance.
For legal practitioners and compliance teams, the key value of the Regulations lies in its precision. The exemption is not generic; it is anchored to defined notes, a defined stabilising actor, and a defined time window. This means that compliance assessments must be granular: counsel should verify the exact instrument (ISIN and terms), the identity of the stabilising entity (including whether a “related corporation” is involved), the nature of the conduct (buying, offering, or agreeing to buy), and whether the activity occurred within the 30-day period from issuance.
From an enforcement perspective, the Regulations also illustrate the regulator’s approach to balancing market integrity with market functioning. By carving out stabilisation only where the statutory conditions are met, the framework aims to permit legitimate stabilisation while preserving the deterrent effect of the general prohibitions against manipulative conduct.
Related Legislation
- Securities and Futures Act (Cap. 289) — particularly sections 197, 198, 274, 275(2), and the regulation-making power in section 337(1)
- Futures Act (as referenced in the legislation timeline context)
- Stabilising Act (as referenced in the legislation timeline context)
- Timeline (legislation timeline reference for version control)
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 2005 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the official text for authoritative provisions.