Statute Details
- Title: Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Notes) (No. 23) Regulations 2005
- Act Code: SFA2001-S440-2005
- Legislation Type: Subsidiary Legislation (SL)
- Authorising Act: Securities and Futures Act (Cap. 289) (via powers under section 337(1))
- Citation: SL 440/2005
- Commencement: 6 July 2005
- Status: Current version as at 27 March 2026
- Key Provisions: Section 2 (definitions); Section 3 (exemption)
- Relevant Act Provisions Exempted: Sections 197 and 198 of the Securities and Futures Act
What Is This Legislation About?
The Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Notes) (No. 23) Regulations 2005 (“Stabilising Action Exemption Regulations”) creates a targeted regulatory exemption from certain market conduct prohibitions in the Securities and Futures Act (the “SFA”). In plain language, it allows a specific kind of “market stabilisation” activity—carried out by a specified financial institution—in relation to a particular set of notes, without triggering the usual restrictions on dealing and related conduct.
Market stabilisation is a common feature of securities issuance. When new notes are issued, there may be volatility in the secondary market as investors form price expectations. To reduce disorderly trading and support liquidity, stabilising arrangements may permit certain purchases (or offers to purchase) by the stabilising entity. However, stabilisation can resemble prohibited market manipulation if not carefully bounded. The Regulations therefore carve out a narrow exemption, limited by (i) the identity of the stabilising actor, (ii) the specific notes, and (iii) a strict time window after issuance.
Practically, the Regulations are designed to balance two policy goals: (1) maintaining market integrity by enforcing market conduct rules, and (2) permitting legitimate stabilisation that supports orderly trading during the initial post-issuance period. The exemption is not general; it is tied to defined “Notes” and to “stabilising action” by Deutsche Bank Securities Inc. (and its related corporations), and it is available only to stabilising participants who fall within specified categories of persons.
What Are the Key Provisions?
Section 1 (Citation and commencement) provides the legal identity of the Regulations and states that they come into operation on 6 July 2005. For practitioners, this matters when assessing whether stabilising activity occurred within the regulatory framework.
Section 2 (Definitions) is central because the exemption turns entirely on whether the activity and the instruments fall within the defined terms. Two definitions are particularly important:
- “Notes” are defined narrowly as US$ fixed rate notes due 2012 and US$ floating rate notes due 2012, each with a principal amount of up to US$1 billion, issued by Hynix Semiconductor Inc.
- “Stabilising action” is defined as an action taken in Singapore or elsewhere by Deutsche Bank Securities Inc. (or any of its related corporations) to buy, or 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.
This drafting approach is typical of Singapore market conduct exemptions: it prevents the exemption from being used as a “template” for other issuers or other instruments. If the notes are not the specified Hynix notes, or if the stabilising actor is not Deutsche Bank Securities Inc. (or its related corporations), the exemption does not apply.
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 stabilising action conducted with either:
- (a) a person referred to in section 274 of the SFA; or
- (b) a sophisticated investor as defined in section 275(2) of the SFA.
In plain terms, Section 3 creates a time-limited safe harbour for stabilisation activity in the specified notes, but only when the stabilising transactions are carried out with counterparties who fit within the SFA’s defined categories (section 274 persons or sophisticated investors). The “within 30 days from the date of issue” limitation is a hard boundary; stabilisation outside that window would generally fall back into the normal operation of Sections 197 and 198.
What are Sections 197 and 198 doing? While the extract does not reproduce the SFA text, these provisions are part of the SFA’s market conduct framework. The exemption indicates that Sections 197 and 198 impose restrictions that would otherwise capture stabilising purchases or related conduct. The Regulations therefore operate as a targeted override: they remove the application of those prohibitions for qualifying stabilising action, but only within the defined conditions.
How Is This Legislation Structured?
The Regulations are structured in a straightforward, three-section format:
- Section 1 sets out the citation and commencement.
- Section 2 provides definitions, including the precise description of the Notes and the scope of stabilising action.
- Section 3 contains the exemption from the application of Sections 197 and 198 of the SFA, subject to timing and counterparty conditions.
There are no additional parts or schedules in the extract. The legal effect is therefore concentrated: practitioners must focus on whether the stabilisation activity meets the definitions and falls within the exemption conditions.
Who Does This Legislation Apply To?
Although the Regulations are made under the SFA and refer to market conduct prohibitions, the exemption is functionally directed at the stabilising actor and the counterparties to stabilising transactions.
First, the stabilising action must be taken by Deutsche Bank Securities Inc. or its related corporations. Second, the stabilising action must be taken within 30 days from the date of issue of the specified Hynix notes. Third, the stabilising action must be carried out with either a person referred to in section 274 of the SFA or a sophisticated investor under section 275(2). Accordingly, the exemption is not available for stabilisation involving retail counterparties outside those categories, and it is not available for stabilisation by other market participants.
For issuers and dealers, this means that compliance planning should identify: (i) who is authorised to conduct stabilisation, (ii) which notes are covered, (iii) the exact issuance date for the 30-day countdown, and (iv) the counterparty classification for each stabilisation trade or agreement to trade.
Why Is This Legislation Important?
This Regulations is important because it provides a narrow but practical regulatory pathway for legitimate stabilisation in a specific issuance. Without such an exemption, stabilising purchases could be argued to fall within prohibitions designed to prevent market manipulation or improper dealing. By carving out stabilisation within defined parameters, the Regulations reduce legal uncertainty for dealers and help issuers execute financing transactions efficiently.
From an enforcement and compliance perspective, the exemption’s value lies in its conditionality. The Regulations do not grant a blanket permission to stabilise; they require strict adherence to the defined scope. Practitioners should therefore treat the exemption as a safe harbour that must be earned through compliance with all conditions: the correct notes, the correct stabilising entity, the correct timing, and the correct counterparty category.
In practice, these requirements affect documentation and operational controls. For example, dealers typically need to maintain records showing: the date of issue of the notes; the identity of the stabilising entity and its related corporations; the nature of each stabilising transaction (purchase, offer to buy, or agreement to buy); and the counterparty’s status as a section 274 person or sophisticated investor. Where these elements are not evidenced, the exemption may be unavailable, exposing the firm to potential liability under the otherwise applicable SFA provisions.
Related Legislation
- Securities and Futures Act (Cap. 289) — in particular Sections 197, 198, 274, 275(2), and the regulation-making power in section 337(1)
- Futures Act (as referenced in the legislation metadata)
- Stabilising Act (as referenced in the legislation 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. 23) Regulations 2005 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the official text for authoritative provisions.