Statute Details
- Title: Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Notes) (No. 25) Regulations 2004
- Act Code: SFA2001-S357-2004
- Type: Subsidiary Legislation (SL)
- Authorising Act: Securities and Futures Act (Cap. 289) — powers under section 337(1)
- Commencement: 24 June 2004
- Legislative Status: Current version (as at 27 Mar 2026)
- Regulation Number: SL 357/2004
- Key Provisions:
- Regulation 1: Citation and commencement
- Regulation 2: Definitions (including “Notes” and “stabilising action”)
- Regulation 3: Exemption from sections 197 and 198 of the Securities and Futures Act for specified stabilising action
What Is This Legislation About?
The Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Notes) (No. 25) Regulations 2004 (“Stabilising Action Exemption Regulations”) creates a targeted exemption from certain market conduct restrictions in the Securities and Futures Act (the “SFA”) for a specific type of stabilising activity. In plain terms, it allows a particular financial institution to take limited steps to stabilise the trading price of a defined set of convertible notes, without breaching the SFA provisions that would otherwise restrict such conduct.
Stabilisation is a common market practice in securities offerings. When new securities are issued, trading can be volatile and the issuer’s initial market price may fluctuate sharply. Stabilisation aims to reduce disorderly price movements by permitting controlled buying (or offers to buy) by an authorised party. However, because stabilisation can resemble prohibited market manipulation, regulators typically require strict conditions and time limits. These Regulations implement that balance by carving out a narrow exemption for stabilising action in respect of particular notes.
Importantly, this is not a general stabilisation regime for all securities. The Regulations are highly specific: they define the “Notes” by issuer, instrument type, maturity, conversion features, and maximum principal amount; they define the “stabilising action” by reference to the stabilising entity (Goldman Sachs International and related corporations); and they impose a strict temporal window (within 30 days from the date of issue). The exemption also depends on the identity of the counterparty (a person referred to in section 274 of the SFA, or a sophisticated investor as defined in section 275(2) of the SFA).
What Are the Key Provisions?
Regulation 1 (Citation and commencement) is straightforward. It provides the short title and states that the Regulations come into operation on 24 June 2004. For practitioners, this matters mainly for determining whether stabilising actions taken on or after that date could rely on the exemption.
Regulation 2 (Definitions) is the core of the Regulations because it tightly constrains what conduct can qualify. Two definitions are critical:
- “Notes” are defined as the 7-year zero coupon convertible notes due June 2011 issued by Formosa Petrochemical Corporation for a principal amount of up to US$250 million. The notes are convertible into new ordinary shares of Formosa Petrochemical Corporation with a par value of NT$10 each.
- “stabilising action” means an action taken in Singapore or elsewhere by Goldman Sachs International (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.
From a legal risk perspective, these definitions mean that the exemption is not available for stabilisation of other instruments, other issuers, or by other market participants. Even if the activity is conceptually “stabilisation”, it will not qualify unless it fits within the defined “Notes” and is carried out by the specified stabilising entity (Goldman Sachs International or related corporations).
Regulation 3 (Exemption) provides the operative relief. 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, provided the stabilising action is taken 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.
Practically, Regulation 3 does two things. First, it creates a time-limited exemption: stabilising action must occur within 30 days from the notes’ issue date. Second, it creates a counterparty-limited exemption: stabilising action must be conducted with qualifying counterparties (as defined by the SFA’s categories). If either condition is not met—e.g., stabilisation continues beyond the 30-day period, or the stabilising trades are executed with a counterparty that does not fall within section 274 or the sophisticated investor definition—then the exemption would not apply and sections 197 and 198 could be engaged.
Although the extract does not reproduce the text of sections 197 and 198, the exemption’s structure indicates that those sections impose restrictions relevant to market conduct (commonly including prohibitions on certain trading practices or conduct that could be construed as manipulation or misleading market behaviour). The Regulations therefore operate as a targeted “safe harbour” for stabilisation in a narrow fact pattern.
How Is This Legislation Structured?
The Regulations are structured as a short instrument with three substantive provisions:
- Part/Section 1: Enacting formula elements—citation and commencement.
- Section 2: definitions that determine the scope of “Notes” and “stabilising action”.
- Section 3: the exemption provision, specifying the SFA sections disapplied, the time window, and the qualifying counterparties.
There are no additional parts or complex schedules in the extract. The legal work therefore focuses on interpreting the defined terms and ensuring that the stabilising activity fits squarely within the conditions in Regulation 3.
Who Does This Legislation Apply To?
On its face, the exemption applies to stabilising action taken by Goldman Sachs International or its related corporations in relation to the defined Formosa Petrochemical convertible notes. It is not a general exemption for issuers or for all dealers. The stabiliser is effectively “baked into” the definition of stabilising action.
In addition, the exemption is conditional on the stabilising action being taken with a qualifying counterparty: either a person referred to in section 274 of the SFA or a sophisticated investor under section 275(2). Accordingly, even where the stabiliser is the correct entity and the instrument is the correct “Notes”, the exemption may fail if trades are executed with counterparties outside those categories.
Why Is This Legislation Important?
This Regulations is important because it demonstrates how Singapore’s market conduct framework accommodates legitimate market practices while controlling manipulation risk. Stabilisation can be beneficial for orderly markets, but it can also raise concerns about artificial price support. By disapplying specific SFA provisions only within a defined period and for defined counterparties, the Regulations provide a controlled pathway for stabilisation that would otherwise be prohibited or restricted.
For practitioners advising issuers, dealers, or compliance teams, the key practical takeaway is that the exemption is narrow and conditional. The defined “Notes” and “stabilising action” mean that compliance teams must verify:
- the exact instrument being traded (issuer, maturity, conversion terms, and maximum principal amount);
- the stabilising entity (Goldman Sachs International or its related corporations);
- the timing (within 30 days from the date of issue); and
- the counterparty category (section 274 persons or sophisticated investors under section 275(2)).
From an enforcement perspective, the exemption’s design suggests that regulators expect strict adherence to the conditions. If stabilisation is conducted outside the 30-day window or with non-qualifying counterparties, the stabiliser could face exposure under the underlying SFA market conduct provisions (sections 197 and 198). Therefore, legal review should include transaction-level documentation: trade confirmations, counterparty classifications, and a timeline anchored to the notes’ issue date.
Finally, because the Regulations are current as at 27 March 2026 but were made in June 2004, practitioners should still confirm the applicable version through the legislation timeline when advising on historical or ongoing transactions. Even where the text is unchanged, version control is essential for accurate legal risk assessment.
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 legislation metadata)
- Stabilising Act (as referenced in the legislation metadata)
- Legislation Timeline (for version verification)
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. 25) Regulations 2004 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the official text for authoritative provisions.