Statute Details
- Title: Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Notes) (No. 22) Regulations 2005
- Act Code: SFA2001-S412-2005
- Legislation Type: Subsidiary Legislation (SL)
- Authorising Act: Securities and Futures Act (SFA) (notably section 337(1))
- Commencement: 24 June 2005
- Enacting Instrument Number: SL 412/2005
- Status: Current version as at 27 Mar 2026
- Key Provisions: Section 2 (Definitions); Section 3 (Exemption)
- Relevant SFA Provisions Referenced: Sections 197 and 198 (market conduct prohibitions), sections 274 and 275(2) (categories of persons/investors)
- Stabilising Party (as defined): Citigroup Global Markets Limited (and related corporations)
What Is This Legislation About?
The Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Notes) (No. 22) Regulations 2005 (“Stabilising Action Exemption Regulations”) is a targeted regulatory instrument made under the Securities and Futures Act (SFA). In plain terms, it creates a narrow exemption from certain market conduct rules when a specified financial institution undertakes “stabilising action” in relation to a particular issuance of notes.
Market conduct rules in the SFA generally aim to prevent manipulative or misleading trading practices and to ensure fair and orderly markets. However, in some capital markets transactions—particularly new issues—stabilisation activities may be used to reduce volatility and support orderly price formation immediately after issuance. This legislation recognises that stabilisation, if conducted within defined limits and for defined investors, may be consistent with market integrity.
Importantly, this exemption is not a general permission for any stabilisation activity. It is tightly scoped: it applies only to stabilising action taken in respect of “Notes” defined by reference to a specific issuer, currency, pricing type, issuance timing, and maximum principal amount. It also limits the exemption to stabilising action carried out within a specified time window after issue and when dealings are made with specified categories of persons.
What Are the Key Provisions?
Section 1 (Citation and commencement) provides the formal name of the Regulations and sets the commencement date. The Regulations “shall come into operation on 24th June 2005.” For practitioners, this matters because the exemption’s availability depends on timing—particularly where stabilisation must occur within a defined period “from the date of issue of the Notes.”
Section 2 (Definitions) is central because it determines the scope of the exemption. Two defined terms drive the analysis:
(1) “Notes” are defined as “the US$ fixed rate notes issued by Thai Olefins Public Company Limited in June 2005 for a principal amount of up to US$300 million.” This definition is transaction-specific. It means the exemption cannot be relied upon for other issuances, other issuers, different currencies, floating rate notes, or notes issued outside the defined parameters.
(2) “stabilising action” is defined as an action taken in Singapore or elsewhere by Citigroup Global Markets 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 also functional: it focuses on the purpose (stabilising/maintaining price) and the mechanics (buying or offering/agreement to buy). It also clarifies that the action may occur both in Singapore and overseas.
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 dealings made 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.
In practical terms, Section 3 creates a conditional “safe harbour” from the SFA’s market conduct prohibitions in relation to stabilisation activities. The exemption is conditional on all of the following:
- Subject matter: the stabilisation must relate to the specific “Notes” as defined.
- Actor: the stabilising action must fall within the definition—i.e., taken by Citigroup Global Markets Limited or its related corporations.
- Timing: the stabilising action must occur within 30 days from the date of issue of the Notes.
- Counterparties: the stabilising dealings must be with either persons in section 274 or sophisticated investors under section 275(2).
- Conduct type: the action must be buying (or offering/agreement to buy) for the purpose of stabilising or maintaining market price.
For a lawyer advising on compliance, the counterparty limitation is particularly important. Even if a stabilisation strategy is otherwise commercially justified, the exemption will not apply if the stabilising purchases are made outside the permitted investor categories. This means transaction documentation, order routing, and counterparty eligibility checks become part of legal risk management.
How Is This Legislation Structured?
The Regulations are structured in a straightforward, short-form manner typical of targeted exemptions. They contain:
- Section 1: Citation and commencement (when the Regulations take effect).
- Section 2: Definitions (defining “Notes” and “stabilising action”).
- Section 3: Exemption (the operative clause excusing the application of SFA sections 197 and 198 under specified conditions).
There are no additional parts or schedules in the extract provided. The legal work therefore focuses on interpreting the defined terms and ensuring that the stabilisation facts fit squarely within the exemption’s conditions.
Who Does This Legislation Apply To?
Although the Regulations are made under the SFA framework, their practical application is limited to the parties and transactions that match the defined scope. The exemption is conceptually directed at the entity conducting stabilisation—here, Citigroup Global Markets Limited and its related corporations—because “stabilising action” is defined by reference to the actor.
In addition, the exemption’s benefit depends on the counterparty category for the stabilising dealings. The Regulations permit stabilising action (within the 30-day window) only when dealings are with persons referred to in section 274 or with sophisticated investors under section 275(2) of the SFA. Accordingly, market participants must assess whether their trading counterparties fall within those statutory categories.
Why Is This Legislation Important?
This legislation matters because it illustrates how Singapore’s market conduct regime balances two competing objectives: (1) preventing manipulative or improper trading practices, and (2) allowing limited stabilisation in connection with new note issuances to support orderly market functioning. By carving out a narrow exemption, the Regulations provide legal certainty to market participants who undertake stabilisation activities that would otherwise risk breaching general prohibitions.
From an enforcement and compliance perspective, the exemption also signals that stabilisation is not “free from regulation.” Instead, it is permitted only when strict conditions are met—particularly the transaction-specific definition of the Notes, the time-limited 30-day period, and the counterparty restrictions tied to specific investor categories. These constraints reduce the risk that stabilisation becomes a vehicle for market abuse.
For practitioners, the Regulations are useful as a template for how to read exemption instruments: the defined terms (what the Notes are; who may stabilise; what stabilisation means) and the conditional triggers (timing and permitted counterparties) are decisive. Advising on stabilisation therefore requires a fact-intensive review of the issuance terms, the stabilisation programme, the identity of the trading entity, the timing of trades, and the eligibility of counterparties.
Related Legislation
- Securities and Futures Act (Cap. 289): In particular, sections 197 and 198 (market conduct provisions), and sections 274 and 275(2) (relevant investor/person categories), and section 337(1) (power to make exemptions).
- Stabilising Act: (Referenced in the provided metadata as part of the legislative context for stabilisation concepts.)
- Futures Act: (Referenced in the provided metadata as part of the legislative context.)
- Timeline: (Legislative timeline reference to ensure the correct version of the Regulations is consulted.)
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 2005 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the official text for authoritative provisions.