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 (SFA) (Cap. 289)
- Enacting power: Section 337(1) of the Securities and Futures Act
- Citation: SL 40/2005
- Commencement: 20 January 2005
- Key provisions: Section 2 (Definitions); Section 3 (Exemption)
- Regulatory status: Current version as at 27 March 2026 (per the provided extract)
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 (“Stabilising Action (Notes) (No. 2) Regulations”) creates a targeted regulatory exemption from certain market conduct rules under the Securities and Futures Act (SFA). In plain language, it allows specific market participants to take “stabilising action” in relation to a defined set of debt securities (the “Notes”) during a limited period after issuance, without triggering the prohibitions that would otherwise apply.
In securities markets, stabilisation is a practice commonly associated with underwriting and issuance of new securities. The stabilising party may buy, or agree to buy, the relevant securities to support or maintain their market price in the immediate post-issuance period. However, stabilisation can resemble prohibited conduct if it is not clearly carved out from anti-manipulation and market conduct restrictions. These Regulations therefore provide a narrow legal pathway: they exempt stabilising activity from the SFA provisions that would otherwise restrict such dealings.
Importantly, the exemption is not general. It is tailored to: (i) a particular issuer and instrument (the “7-year guaranteed fixed rate notes due January 2012” issued by URC Philippines, Limited and guaranteed by Universal Robina Corporation); (ii) a particular stabilising actor (Credit Suisse First Boston (Europe) Limited and its related corporations); and (iii) a defined time window (within 30 days from the date of issue). This makes the Regulations highly relevant for practitioners advising on underwriting documentation, compliance with market conduct rules, and regulatory risk management for structured issuance programmes.
What Are the Key Provisions?
Section 1 (Citation and commencement) provides the formal legal identity of the Regulations and states when they take effect. The Regulations may be cited as the “Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Notes) (No. 2) Regulations 2005” and they came into operation on 20 January 2005. For practitioners, commencement matters because stabilising activity must fall within the legal framework in force at the time of the relevant dealings.
Section 2 (Definitions) is central because it defines both the subject matter (“Notes”) and the conduct (“stabilising action”). The Regulations define “Notes” as the 7-year guaranteed fixed rate notes due January 2012 issued by URC Philippines, Limited for a principal amount of up to US$200 million, guaranteed by Universal Robina Corporation. This definition is precise and instrument-specific: stabilising action in respect of other notes, other maturities, or other issuers would not fall within the exemption.
The Regulations also define “stabilising action” 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. Two practical points follow from this definition. First, the exemption is not limited to purchases executed in Singapore; it covers stabilising activity conducted outside Singapore as long as it is within the defined stabilising framework. Second, the definition includes not only actual purchases but also offers and agreements to buy, which means compliance teams must consider communications and contractual commitments, not just executed trades.
Section 3 (Exemption) provides the operative relief. It states that Sections 197 and 198 of the Act shall not apply to any stabilising action taken in respect of any of the Notes, within 30 days from the date of issue, with stabilising action undertaken 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.
Although the extract does not reproduce Sections 197, 198, 274, and 275(2), the structure indicates that Sections 197 and 198 are the relevant market conduct prohibitions that would otherwise constrain stabilisation. The exemption is therefore conditional: stabilising action must occur within the 30-day post-issuance period and must be directed to counterparties falling within the specified categories. For legal practitioners, this is a compliance “gatekeeping” mechanism. It is not enough that the stabilising party and the instrument match; the counterparty category also matters.
From a risk perspective, the conditional counterparty requirement is likely intended to ensure that stabilising transactions are conducted with market participants who are either institutionally connected (as contemplated by section 274) or sufficiently sophisticated (as contemplated by section 275(2)). Practically, advisers should ensure that underwriting and trading desks can evidence the identity and classification of counterparties, and that documentation reflects the intended reliance on the exemption.
How Is This Legislation Structured?
The Regulations are structured in a straightforward, three-section format typical of targeted exemptions:
(1) Section 1 sets out the citation and commencement date.
(2) Section 2 provides definitions for “Notes” and “stabilising action”. These definitions are the legal foundation for whether any particular stabilising activity qualifies.
(3) Section 3 contains the exemption clause. It identifies the specific SFA provisions excluded from application (Sections 197 and 198), specifies the time limit (within 30 days from issue), and sets out the counterparty categories (persons under section 274 or sophisticated investors under section 275(2)).
There are no additional parts or schedules in the extract. The Regulations therefore operate as a narrow instrument: they do not create a general stabilisation regime, but rather carve out a defined set of stabilising activities for a defined issuance.
Who Does This Legislation Apply To?
In substance, the Regulations apply to parties engaging in stabilising action in relation to the defined Notes. The exemption is expressly linked to stabilising action taken by Credit Suisse First Boston (Europe) Limited or its related corporations. This means that, while the exemption is “available” in the sense that it removes the application of Sections 197 and 198, it is functionally designed for the stabilising actor(s) specified in the definition of “stabilising action”.
Additionally, the exemption is conditional on the stabilising action being taken with counterparties falling within the categories in Section 3: either persons referred to in section 274 of the SFA or sophisticated investors as defined in section 275(2). Therefore, the Regulations affect not only the stabilising party but also the trading relationships and counterparty selection for the stabilisation programme. If stabilising trades are conducted with counterparties outside these categories, the exemption would not apply, and the underlying prohibitions in Sections 197 and 198 would remain relevant.
Why Is This Legislation Important?
This Regulations is important because it clarifies how stabilisation can be conducted lawfully in Singapore in connection with a specific issuance. Without an exemption, stabilising purchases or related commitments could be interpreted as conduct prohibited under market conduct rules—potentially exposing the stabilising party and its advisers to regulatory enforcement risk, civil liability risk, or reputational harm.
For practitioners, the key value lies in the precision of the exemption. The Regulations define the instrument (issuer, guarantee, maturity, and principal amount cap), the actor (Credit Suisse First Boston (Europe) Limited and related corporations), the conduct (buying/offer/agree to buy to stabilise price), and the timing (within 30 days from issue). This precision enables counsel to advise with greater certainty when drafting stabilisation disclosures, underwriting terms, and compliance procedures.
From an enforcement and compliance standpoint, the counterparty condition is equally significant. It requires careful classification of counterparties and may necessitate internal controls to ensure that stabilising trades are executed only with eligible persons. In practice, legal teams should coordinate with compliance and trading operations to maintain evidence supporting reliance on the exemption—such as trade records, counterparty documentation, and timing controls.
Finally, the Regulations illustrate a broader regulatory approach in Singapore: rather than adopting a single blanket stabilisation rule, the law can provide instrument- and transaction-specific exemptions. This approach can be particularly relevant for cross-border issuances and guaranteed notes, where stabilisation may occur in multiple jurisdictions but still needs to be aligned with Singapore’s market conduct framework.
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)
- Legislation Timeline (as referenced in the provided metadata)
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.