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
- Type: Subsidiary Legislation (SL)
- Enacting / Authorising Act: Securities and Futures Act (SFA) (notably section 337(1))
- Legislative Instrument No.: SL 412/2005
- 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 SFA Provisions Referenced: Sections 197, 198, 274, 275(2), 337(1)
- Stabilising Firm (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 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 a specific kind of activity—“stabilising action”—carried out in relation to a particular issuance of notes.
Stabilisation is a common feature of capital markets transactions, especially around the initial trading period after issuance. Market participants may take steps intended to support or maintain the trading price of newly issued securities. However, market conduct legislation typically restricts manipulative or misleading trading practices. This set of Regulations reconciles those competing policy goals by allowing stabilisation in defined circumstances, while still preserving the overall integrity framework under the SFA.
Importantly, the exemption is not general. It is limited to stabilising action in respect of “Notes” issued by a named issuer (Thai Olefins Public Company Limited) in June 2005, up to a specified principal amount, and within a specified time window after issue. It also limits who may be counterparties to the stabilising trades—either persons falling within a defined category under section 274 of the SFA or “sophisticated investors” as defined under section 275(2) of the SFA.
What Are the Key Provisions?
Section 1 (Citation and commencement) provides the formal name of the Regulations and states that they came into operation on 24 June 2005. For practitioners, commencement matters because exemptions from statutory prohibitions only apply when the instrument is in force. Here, the Regulations are effective from 24 June 2005.
Section 2 (Definitions) is crucial because it determines the scope of the exemption. Two defined terms drive the analysis:
- “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.
- “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.
These definitions are legally significant because they confine the exemption to (i) a particular security (the Notes), (ii) a particular stabilising purpose (stabilising or maintaining market price), and (iii) a particular stabilising actor (Citigroup Global Markets Limited and related corporations). If a different firm conducts similar trades, or if the trades are not directed at stabilisation/price maintenance, the exemption may not apply.
Section 3 (Exemption) is the operative provision. It states that Sections 197 and 198 of the SFA shall not apply to any stabilising action taken in respect of any of the Notes, within 30 days from the date of issue, with two alternative counterparty conditions:
- the stabilising action is with a person referred to in section 274 of the Act; or
- the stabilising action is with a sophisticated investor as defined in section 275(2) of the Act.
In practical terms, this means that the SFA’s prohibitions in sections 197 and 198—whatever their precise content—are carved out for stabilising trades that meet all conditions: (1) they are stabilising action as defined; (2) they relate to the defined Notes; (3) they occur within the 30-day post-issue period; and (4) the counterparty is within the permitted categories.
For counsel advising issuers, arrangers, or dealer firms, the exemption is therefore a compliance “safe harbour” only when the factual matrix fits tightly within the defined terms. The 30-day limit is particularly important. Stabilisation outside that window would likely fall back into the general SFA regime, exposing the firm to potential market conduct liability.
How Is This Legislation Structured?
The Regulations are structured in a simple, three-section format:
- Section 1 sets out the citation and commencement.
- Section 2 provides definitions that narrow the scope of the exemption (notably “Notes” and “stabilising action”).
- Section 3 contains the exemption from specified SFA provisions (sections 197 and 198), subject to time and counterparty conditions.
There are no additional parts or complex schedules in the extract provided. The legislative technique is to define the relevant transaction and actor precisely, then carve out a limited exemption from the relevant prohibitions.
Who Does This Legislation Apply To?
Although the Regulations are subsidiary legislation made under the SFA, their practical application is directed at market participants involved in the stabilisation of the specified notes. The exemption is drafted around the stabilising actor: Citigroup Global Markets Limited and its related corporations. Accordingly, the exemption is most relevant to those entities when they conduct stabilising trades.
However, the Regulations also impose conditions relating to counterparties. Stabilising action must be taken with either (a) persons referred to in section 274 of the SFA, or (b) sophisticated investors under section 275(2). This means that even if the stabilising firm is within the definition, the exemption may not apply if the trades are executed with counterparties outside those categories.
Finally, the exemption is tied to a specific issuance: the US$ fixed rate notes issued by Thai Olefins Public Company Limited in June 2005 up to US$300 million. Therefore, the Regulations do not generally authorise stabilisation for other issuers or other note issues.
Why Is This Legislation Important?
This Regulations matters because it operationalises a policy balance between (i) allowing legitimate market-making and stabilisation practices around new issuances and (ii) preventing manipulative conduct that could undermine market integrity. By exempting stabilising action from particular SFA prohibitions, the Regulations reduce legal uncertainty for firms that participate in underwriting and distribution processes.
From a compliance and litigation-risk perspective, the exemption is valuable but narrow. Practitioners should treat it as a checklist-driven safe harbour rather than a broad permission. The legal effect depends on meeting all conditions: the correct security (“Notes”), the correct stabilising actor (Citigroup and related corporations), the correct purpose (stabilise or maintain market price), the correct timing (within 30 days from issue), and the correct counterparty category (section 274 persons or sophisticated investors under section 275(2)).
In practice, this means legal teams advising on bond issuance documentation, stabilisation arrangements, and execution protocols should ensure that:
- the stabilisation strategy is documented as “stabilising action” within the meaning of the Regulations;
- the trades are executed within the 30-day post-issue period;
- counterparty eligibility is verified and recorded (including whether counterparties qualify as sophisticated investors under the SFA definition); and
- the scope of the exemption is not inadvertently exceeded (e.g., by trading outside the defined notes or by involving other entities not within the definition).
Because the exemption carves out only sections 197 and 198, counsel should also consider whether other SFA provisions (not exempted) could still apply to stabilisation conduct. The Regulations do not necessarily immunise all market conduct concerns; they only remove the specified statutory prohibitions.
Related Legislation
- Securities and Futures Act (SFA) (Cap. 289) — particularly sections 197, 198, 274, 275(2), and 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. 22) Regulations 2005 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the official text for authoritative provisions.