Statute Details
- Title: Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Notes) (No. 21) Regulations 2005
- Act Code: SFA2001-S411-2005
- Type: Subsidiary Legislation (SL)
- Authorising Act: Securities and Futures Act (Cap. 289)
- Enacting power: Section 337(1) of the Securities and Futures Act
- Citation: SL 411/2005
- Commencement: 24 June 2005
- Status: Current version as at 27 March 2026 (per provided extract)
- Key provisions: Section 1 (citation and commencement), 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. 21) Regulations 2005 (“Stabilising Action Exemption Regulations”) is a targeted regulatory instrument. In plain terms, it creates a narrow exemption from certain market conduct rules in the Securities and Futures Act (“SFA”) for specific stabilising activities carried out in connection with particular debt securities (notes) issued by LG Electronics Inc.
Stabilising actions are common in capital markets. When new bonds or notes are issued, market makers or arrangers may take limited steps to support or “stabilise” the trading price during the initial period after issuance. These actions can reduce volatility and help ensure orderly trading. However, stabilising conduct can also resemble prohibited market manipulation if not carefully constrained. Singapore’s market conduct framework therefore regulates such behaviour, and this subsidiary legislation provides an exemption only where the stabilising activity fits within defined parameters.
Importantly, the exemption is not general. It applies only to stabilising action taken in respect of two specified series of notes—“2010 Notes” and “2015 Notes”—and only within a defined time window (30 days from the date of issue). It also limits the eligible counterparties (persons specified in the SFA and sophisticated investors). The result is a controlled carve-out that supports legitimate market-making/stabilisation while preserving the integrity of the market conduct regime.
What Are the Key Provisions?
Section 1 (Citation and commencement) confirms the legal identity and effective date of the Regulations. The Regulations may be cited as the “Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Notes) (No. 21) Regulations 2005” and came into operation on 24 June 2005. For practitioners, this matters when assessing whether stabilising trades occurred within the regulatory framework and whether the exemption was available at the time of the relevant dealings.
Section 2 (Definitions) is the heart of the instrument’s precision. It defines three key terms:
- “2010 Notes”: the 5-year US$ fixed rate notes due June 2010 issued by LG Electronics Inc. for a principal amount of up to US$600 million.
- “2015 Notes”: the 10-year US$ fixed rate notes due June 2015 issued by LG Electronics Inc. for a principal amount of up to US$600 million.
- “stabilising action”: 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 2010 Notes or 2015 Notes in order to stabilise or maintain the market price of the relevant notes in Singapore or elsewhere.
These definitions are crucial because the exemption in Section 3 is triggered only when the conduct falls within this defined stabilising action. The definition is also geographically broad (“in Singapore or elsewhere”), reflecting that stabilisation may occur in multiple trading venues, but the purpose is tied to maintaining the market price “in Singapore or elsewhere.”
Section 3 (Exemption) provides the operative relief. It states that Sections 197 and 198 of the Act shall not apply to stabilising action taken in respect of the 2010 Notes or 2015 Notes, within 30 days from the date of issue of the relevant notes, provided the stabilising action is 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.
From a practitioner’s perspective, Section 3 contains three layers of limitation:
- Subject-matter limitation: only stabilising action “in respect of” the specified LG Electronics notes (2010 and 2015 series).
- Time limitation: only stabilising action taken within 30 days from the date of issue. This is a strict temporal boundary; trades outside the window would not be covered by the exemption.
- Counterparty limitation: the stabilising action must be taken with a person in the category described in section 274 of the SFA or with a sophisticated investor under section 275(2). This restricts the exemption from being used for dealings with retail or other non-qualifying counterparties.
Although the extract does not reproduce Sections 197 and 198 of the SFA, the exemption’s structure strongly indicates that those sections impose market conduct restrictions that could otherwise capture stabilising trades. The Regulations therefore operate as a statutory “safe harbour” for specified stabilising conduct, but only within the defined scope.
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 precisely identify the relevant notes and the stabilising conduct that qualifies.
- Section 3 contains the exemption, specifying which SFA provisions are disapplied, the time window, and the eligible counterparties.
There are no additional parts or schedules in the extract, reflecting the Regulations’ purpose as a targeted exemption instrument rather than a comprehensive regulatory code.
Who Does This Legislation Apply To?
In practical terms, the Regulations apply to parties who may conduct stabilising action in relation to the defined LG Electronics notes. The definition of “stabilising action” is anchored to Credit Suisse First Boston (Europe) Limited and its related corporations. Therefore, the exemption is primarily relevant to that stabilising entity (and its corporate group) and to any persons involved in counterparties for such stabilising trades.
However, the exemption’s availability also depends on the counterparty category. Stabilising action must be taken with a person referred to in section 274 of the SFA or with a sophisticated investor under section 275(2). Accordingly, even if the stabilising entity conducts trades within the 30-day period, the exemption may fail if the trades are executed with counterparties outside those categories.
Why Is This Legislation Important?
This legislation is significant because it demonstrates how Singapore balances two competing regulatory objectives: (1) allowing legitimate market practices that support orderly trading after issuance, and (2) preventing conduct that could undermine market integrity. By disapplying Sections 197 and 198 of the SFA for a narrowly defined stabilising activity, the Regulations provide legal certainty to market participants who would otherwise face uncertainty about whether stabilising trades constitute prohibited market conduct.
For practitioners advising issuers, arrangers, dealers, or compliance teams, the key value of the Regulations lies in the precision of the exemption. The defined notes, the defined stabilising actor (Credit Suisse First Boston (Europe) Limited and related corporations), the strict 30-day limit, and the restricted counterparty categories collectively create a compliance framework that can be operationalised through trade surveillance, documentation, and eligibility checks.
From an enforcement and risk perspective, the exemption is not a blanket permission. If stabilising action is conducted outside the 30-day window, in relation to different notes, by an entity not within the defined stabilising actor, or with counterparties not covered by section 274 or the sophisticated investor definition, then the exemption would not apply. In that scenario, the stabilising trades could potentially be assessed under the underlying SFA market conduct provisions (Sections 197 and 198), exposing the relevant parties to regulatory scrutiny.
Related Legislation
- Securities and Futures Act (Cap. 289) — in particular, Sections 197, 198, 274, 275(2), and the authorising provision 337(1).
- Futures Act (as referenced in the provided metadata context)
- Stabilising Act (as referenced in the provided metadata context)
- Legislation Timeline (for version verification, as indicated in the provided extract)
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. 21) Regulations 2005 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the official text for authoritative provisions.