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
- Legislation Type: Subsidiary legislation (SL)
- Authorising Act: Securities and Futures Act (Cap. 289)
- Enacting Authority: Monetary Authority of Singapore (MAS)
- 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)
- Relevant Act Provisions: Sections 197 and 198 of the Securities and Futures Act; referenced sections 274 and 275(2) of the Act
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”) creates a targeted regulatory exemption from certain market conduct rules in the Securities and Futures Act (the “SFA”). In plain terms, it allows specified parties to take “stabilising action” in relation to particular debt securities (notes) during a short window after issuance, without breaching the SFA’s general prohibitions on market manipulation or improper dealing.
The regulations are narrow and instrument-specific. They do not create a general stabilisation regime for all securities. Instead, they define two specific series of notes issued by LG Electronics Inc.—the “2010 Notes” and the “2015 Notes”—and permit stabilising conduct in respect of those notes for up to 30 days from the date of issue. The exemption is also limited to stabilising action carried out with or involving certain categories of counterparties (persons under section 274 of the SFA, or “sophisticated investors” under section 275(2) of the SFA).
Practically, the regulations recognise a common feature of capital markets: underwriters and dealers may undertake stabilisation to reduce volatility and support orderly trading in the immediate aftermath of an issuance. Without an exemption, stabilisation activity—depending on how it is structured—could be characterised as prohibited conduct under the SFA. These regulations provide a legal “safe harbour” for stabilising action in the defined circumstances.
What Are the Key Provisions?
Section 1 (Citation and commencement) is straightforward. It provides the official title and states that the regulations come into operation on 24 June 2005. For practitioners, this matters mainly for determining whether stabilising action undertaken around the issuance date falls within the regulatory framework.
Section 2 (Definitions) sets the foundation for the exemption by defining the relevant instruments and the conduct. Two key definitions are central:
- “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.
The definition of “stabilising action” is also crucial. It is limited to actions 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, the 2010 Notes or 2015 Notes in order to stabilise or maintain their market price in Singapore or elsewhere. This definition is both conduct-specific (buying/offering to buy) and purpose-specific (stabilisation/price maintenance), and it is tied to a particular stabilising entity and its corporate group.
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 the 2010 Notes or 2015 Notes, within 30 days from the date of issue of the relevant notes. The exemption is conditional on the stabilising action being taken with a specified counterparty category:
- Section 3(a): a person referred to in section 274 of the SFA; or
- Section 3(b): a sophisticated investor as defined in section 275(2) of the SFA.
From a legal analysis perspective, the exemption’s structure suggests that the SFA’s general market conduct prohibitions (in sections 197 and 198) are displaced only for stabilising activity that occurs within the defined time period and is carried out in dealings involving the permitted counterparty categories. For practitioners, this means that compliance is not merely about the stabilisation purpose; it also requires careful attention to who is involved in the relevant transactions and when the stabilisation occurs.
Although the extract does not reproduce the text of sections 197 and 198, the typical function of such provisions in market conduct regimes is to prohibit manipulative or improper dealing and to regulate conduct that may affect market prices. The exemption therefore operates as a targeted carve-out: it does not authorise trading generally, but rather removes the risk of contravention of those specific SFA sections for stabilising action that meets the defined criteria.
How Is This Legislation Structured?
The regulations are concise and consist of an enacting formula and three substantive sections:
- Section 1 (Citation and commencement): establishes the name and commencement date.
- Section 2 (Definitions): defines the relevant notes (2010 Notes and 2015 Notes) and the stabilising action (including the stabiliser entity, the conduct, and the stabilisation purpose).
- Section 3 (Exemption): provides the exemption from the SFA’s market conduct provisions, limited by time (30 days from issue), instrument (the two LG Electronics note series), stabilising actor (as defined), and counterparty category (section 274 persons or sophisticated investors under section 275(2)).
Notably, there are no schedules or detailed procedural requirements in the extract. The legal effect is achieved through the definitional framework and the exemption clause.
Who Does This Legislation Apply To?
The regulations apply to stabilising action in respect of the defined LG Electronics notes, but only when the stabilising action is taken by Credit Suisse First Boston (Europe) Limited or its related corporations (as captured by the definition of “stabilising action”). This means the exemption is not available to every dealer or issuer; it is tied to a specific stabilising entity and its corporate group.
In addition, the exemption is conditional on the stabilising action being taken with or involving a person referred to in section 274 of the SFA or a sophisticated investor under section 275(2). Accordingly, even where the stabiliser is within the defined group and the activity is within the 30-day window, the exemption may not apply if the relevant dealings involve counterparties outside those categories.
Why Is This Legislation Important?
For market participants, the significance of the Stabilising Action Exemption Regulations lies in the legal certainty they provide. Stabilisation activity can be commercially important immediately after issuance, but it may also be scrutinised under market conduct rules. By carving out stabilising action that meets defined criteria, the regulations reduce regulatory ambiguity and help underwriters and dealers structure stabilisation programmes in a way that is defensible under Singapore law.
From a compliance standpoint, the regulations highlight that stabilisation is not a blanket permission. The exemption is tightly bounded by:
- Instrument: only the specified 2010 and 2015 LG Electronics notes.
- Actor: Credit Suisse First Boston (Europe) Limited and its related corporations.
- Time: within 30 days from the date of issue.
- Counterparty category: section 274 persons or sophisticated investors (section 275(2)).
For practitioners advising on capital markets transactions, these boundaries translate into practical steps: confirming the issuance date to calculate the 30-day period; documenting that the stabilising conduct is undertaken for the stabilisation/price maintenance purpose; ensuring that the stabiliser entity is within the defined group; and verifying that counterparties fall within the permitted categories. Failure on any of these points could expose the stabilising activity to the application of the SFA’s market conduct provisions.
Finally, the regulations illustrate how Singapore’s market conduct framework can accommodate market practices through targeted exemptions. Rather than rewriting the general prohibitions, MAS uses subsidiary regulations to create narrow safe harbours for specific transactions, balancing investor protection and market efficiency.
Related Legislation
- Securities and Futures Act (Cap. 289): Sections 197 and 198 (market conduct provisions from which exemption is granted); Sections 274 and 275(2) (counterparty categories referenced in the exemption).
- Futures Act (referenced in provided metadata as related legislation).
- Stabilising Act (referenced in provided metadata as related legislation).
- Timeline (referenced in provided metadata as related legislation/resource).
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.