Statute Details
- Title: Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Notes) (No. 22) Regulations 2004
- Act Code: SFA2001-S339-2004
- Type: Subsidiary Legislation (SL)
- Authorising Act: Securities and Futures Act (Cap. 289)
- Authorising Provision: Section 337(1) of the Securities and Futures Act
- Citation: SL 339/2004
- Commencement: 15 June 2004
- Status: Current version (as at 27 Mar 2026)
- 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. 22) Regulations 2004 (“Stabilising Action Exemption Regulations”) is a targeted regulatory instrument that carves out a specific exemption from certain market conduct rules under the Securities and Futures Act (the “SFA”). In plain terms, it allows authorised market participants to take “stabilising action” in relation to a particular issuance of notes without breaching the general prohibitions that would otherwise apply.
The regulations are not a broad framework for stabilisation across all securities. Instead, they are narrowly designed for a defined set of instruments and a defined time window. The notes in question are fixed rate subordinated notes due January 2015 issued by Industrial Bank of Korea, up to US$300 million, under its US$2 billion Global Medium Term Note Programme. The exemption is time-limited to actions taken within 30 days from the date of issue of the notes.
From a practitioner’s perspective, the key legal function of the regulations is to reduce compliance risk for stabilisation activities that are commonly used in capital markets to support orderly trading and mitigate excessive volatility immediately after issuance. The exemption is also structured to apply only to stabilising actions taken in Singapore or elsewhere by UBS Limited (and its related corporations), and only when the stabilisation is directed at certain categories of counterparties (as defined by reference to the SFA).
What Are the Key Provisions?
1. Citation and commencement (Regulation 1)
Regulation 1 provides the short title and states that the regulations come into operation on 15 June 2004. This matters for determining whether stabilising actions undertaken around the issuance period fall within the regulatory regime.
2. Definitions (Regulation 2)
Regulation 2 defines two central concepts: “Notes” and “stabilising action”. These definitions are crucial because the exemption in Regulation 3 applies only when both the instrument and the conduct fall within the defined terms.
“Notes” are defined as the fixed rate subordinated notes due January 2015 issued by Industrial Bank of Korea for a principal amount of up to US$300 million, under the US$2 billion Global Medium Term Note Programme. This is a highly specific identification. If the stabilisation relates to different notes (even if issued by the same issuer under a different tranche or programme), the exemption would not automatically apply.
“Stabilising action” is defined as an action taken in Singapore or elsewhere by UBS 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 therefore captures both actual purchases and pre-transaction commitments (offers or agreements to buy). It also clarifies that the stabilisation objective is market-price stabilisation, not general liquidity provision.
3. The exemption from sections 197 and 198 of the SFA (Regulation 3)
Regulation 3 is the operative provision. 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, provided the stabilising action is taken with one of the specified counterparty categories.
The exemption is conditional in two ways:
- Time condition: the stabilising action must be taken within 30 days from the date of issue of the notes. This is a strict temporal limitation. Stabilisation outside the 30-day window would not be covered by this exemption.
- Counterparty condition: the stabilising action must be taken with either:
- a person referred to in section 274 of the Act; or
- 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 drafting technique is clear: the regulations “import” the relevant categories from the SFA by reference. Practitioners should therefore read the SFA provisions alongside these regulations to determine precisely which counterparties qualify. In practice, these categories typically relate to investors with sufficient sophistication or particular regulatory status, which helps ensure that stabilisation activities do not expose less-experienced investors to conduct that might otherwise be prohibited.
Practical compliance point: Because Regulation 3 exempts stabilising action from the application of specific SFA sections, the exemption is not a general permission to trade. It is a narrow carve-out that must be mapped to the exact conduct (buying/offer/agreement to buy for stabilisation), the exact instrument (the defined notes), the exact actor (UBS Limited or related corporations), the exact timeframe (30 days from issue), and the exact counterparty category (section 274 persons or sophisticated investors).
How Is This Legislation Structured?
The regulations are structured as a short, three-regulation instrument:
- Regulation 1 (Citation and commencement): sets the legal name and effective date.
- Regulation 2 (Definitions): defines the scope-limiting terms (“Notes” and “stabilising action”).
- Regulation 3 (Exemption): provides the exemption from the application of sections 197 and 198 of the SFA, subject to the 30-day period and the counterparty categories.
There are no additional parts or schedules in the extract, reflecting the regulations’ purpose as a targeted exemption rather than a comprehensive regulatory regime.
Who Does This Legislation Apply To?
By its terms, the regulations apply to stabilising actions taken in respect of the defined Industrial Bank of Korea notes. The conduct must be taken by UBS Limited or any of its related corporations. This means that other dealers or arrangers cannot rely on this exemption unless they fall within the defined UBS group (as “related corporations”) and their stabilisation activities meet the other conditions.
In addition, the exemption is conditional on the stabilising action being taken with either (i) a person referred to in section 274 of the SFA, or (ii) a sophisticated investor as defined in section 275(2). Accordingly, the regulations do not only regulate who may stabilise; they also regulate who may be the counterparty for the stabilising trades. For transaction documentation and execution planning, this requires careful counterparties classification and evidence of eligibility.
Why Is This Legislation Important?
This legislation is important because it provides a legally recognised pathway for market stabilisation in Singapore in relation to a specific note issuance. Without such an exemption, stabilisation activities could potentially fall within the scope of prohibitions in the SFA (here, sections 197 and 198). Those prohibitions are designed to protect market integrity by preventing manipulative or misleading conduct. However, stabilisation—when properly conducted and limited—can serve legitimate market functions, such as reducing disorderly trading immediately after issuance.
For practitioners, the value of the regulations lies in the clarity of the exemption’s boundaries. The regulations are drafted to be highly specific: they define the notes, the stabilising actor, the stabilisation conduct, the geographic element (“in Singapore or elsewhere”), the time window (30 days from issue), and the counterparty categories. This specificity reduces ambiguity and supports compliance planning for issuance syndicates, dealers, and legal teams.
From an enforcement and risk perspective, the exemption’s conditional structure means that partial compliance is unlikely to be sufficient. If stabilising action is taken outside the 30-day period, or if the counterparty does not fall within the referenced SFA categories, the exemption would not apply. Similarly, if stabilisation relates to notes outside the defined “Notes” description, the exemption would not extend to those instruments. Lawyers advising on stabilisation programmes should therefore implement robust internal controls: eligibility checks, trade capture systems, documentation of the stabilisation purpose, and monitoring of the 30-day window.
Related Legislation
- Securities and Futures Act (Cap. 289) — including sections 197, 198, 274, 275(2), and the regulation-making power in section 337(1)
- Futures Act (as referenced in the platform metadata)
- Stabilising Act (as referenced in the platform metadata)
- Timeline (legislation versioning reference)
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. 22) Regulations 2004 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the official text for authoritative provisions.