Statute Details
- Title: Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Notes) (No. 27) Regulations 2004
- Act Code: SFA2001-S359-2004
- Type: Subsidiary Legislation (sl)
- Authorising Act: Securities and Futures Act (Cap. 289)
- Enacting power: Section 337(1) of the Securities and Futures Act
- Citation: SL 359/2004
- Commencement: 24 June 2004
- Status (as provided): Current version as at 27 Mar 2026
- Key provisions: Section 2 (Definitions); Section 3 (Exemption)
- Regulatory authority: Monetary Authority of Singapore (MAS)
- Made date: 21 June 2004
What Is This Legislation About?
The Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Notes) (No. 27) Regulations 2004 (“Stabilising Action Exemption Regulations”) is a targeted regulatory instrument. In plain terms, it creates a specific exemption from certain market conduct restrictions in the Securities and Futures Act (the “SFA”) for a particular kind of trading activity—so-called “stabilising action”—carried out in relation to a defined set of debt securities (“Notes”).
Stabilising action is a common feature of certain capital markets transactions. When new securities are issued, there can be volatility in the early trading period. Stabilisation mechanisms are intended to support orderly trading and reduce price dislocation. However, stabilisation can resemble prohibited market manipulation if not carefully bounded. Accordingly, the SFA contains provisions that generally restrict conduct that could distort or artificially influence market prices.
This subsidiary legislation addresses that tension by carving out a narrow exemption. It does not legalise stabilisation broadly; it only exempts stabilising action in respect of the defined Notes, within a defined time window, and when undertaken by specified categories of persons. The exemption is therefore best understood as a transaction-specific “safe harbour” designed to permit legitimate stabilisation while preserving the SFA’s overall market integrity objectives.
What Are the Key Provisions?
Section 1 (Citation and commencement) provides the formal name of the Regulations and sets the commencement date. The Regulations may be cited as the “Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Notes) (No. 27) Regulations 2004” and come into operation on 24 June 2004. For practitioners, this matters because the exemption is only available for stabilising action taken within the relevant statutory period following the Notes’ issue date, and the Regulations must be in force for the exemption to apply.
Section 2 (Definitions) is critical because the exemption is only as broad as the definitions allow. Two terms are defined:
- “Notes”: The Regulations define the Notes very precisely as 7-year zero coupon exchangeable notes due June 2011 issued by Nan Ya Plastics Corporation for a principal amount of up to US$250 million. The Notes are exchangeable into existing ordinary shares of Formosa Petrochemical Corporation with a par value of NT$10 each.
- “stabilising action”: The Regulations define stabilising action as 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.
This drafting approach is typical of Singapore’s market conduct exemptions: the instrument is “locked” to a particular security and a particular stabilising actor (or actor group). If the security is not the defined Notes, or the stabilising activity is not carried out by the defined person(s), the exemption will not apply.
Section 3 (Exemption) is the operative provision. It states that Sections 197 and 198 of the Act shall not apply to stabilising action taken in respect of any of the Notes, within 30 days from the date of issue of the Notes, with respect to stabilising action taken by:
- (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 time-limited safe harbour. The exemption is not indefinite; it is confined to the first 30 days after issuance. It also depends on the identity of the counterparty or relevant participant—those falling within section 274, or those who qualify as sophisticated investors under section 275(2). Although the extract does not reproduce the text of sections 197, 198, 274, and 275, the structure indicates that the SFA’s general market conduct prohibitions (sections 197 and 198) are being suspended for the specified stabilising conduct in the specified circumstances.
For counsel advising issuers, arrangers, or stabilisation agents, the key compliance task is to map the transaction facts onto the exemption’s conditions: (i) are the securities the defined Notes; (ii) is the conduct “stabilising action” as defined (including the actor and purpose); (iii) is it within the 30-day period from issue; and (iv) is it undertaken with or involving persons in the categories specified in section 274 or sophisticated investors under section 275(2).
How Is This Legislation Structured?
The Regulations are short and consist of an enacting formula and three substantive sections:
- Section 1 sets out the citation and commencement.
- Section 2 provides definitions of “Notes” and “stabilising action”.
- Section 3 establishes the exemption from specified SFA provisions for stabilising action in respect of the defined Notes, within a specified period, and involving specified categories of persons.
Because the instrument is so compact, practitioners should treat the definitions in Section 2 as the “gatekeeping” mechanism and Section 3 as the “permission” mechanism. If either fails, the exemption will not operate.
Who Does This Legislation Apply To?
Although the exemption is framed as an exemption from provisions of the SFA, it effectively applies to parties involved in stabilisation of the defined Notes—most notably Goldman Sachs International and its related corporations, because the definition of “stabilising action” is limited to actions taken by that group. The exemption is also conditioned on the involvement of persons falling within section 274 of the SFA or sophisticated investors under section 275(2).
Accordingly, the Regulations are not a general market conduct relief for any stabilisation activity. They are transaction- and participant-specific. In practice, the parties most likely to rely on the exemption are stabilisation agents, dealers, and transaction participants who need legal certainty that stabilising purchases or purchase commitments will not trigger the SFA’s market conduct prohibitions during the early post-issuance period.
Why Is This Legislation Important?
This legislation is important because it provides a controlled legal pathway for stabilisation activity in Singapore’s capital markets. Without an exemption, stabilising purchases could be argued to fall within the ambit of market manipulation or other prohibited conduct. By expressly disapplying sections 197 and 198 of the SFA, the Regulations reduce legal uncertainty and allow market participants to structure stabilisation programmes in a way that is consistent with regulatory expectations.
From a compliance perspective, the Regulations highlight three practical constraints that lawyers must operationalise:
- Security specificity: the exemption is limited to the defined Notes (issuer, instrument type, maturity, exchangeability features, and principal amount cap).
- Actor specificity: stabilising action must be taken by Goldman Sachs International or its related corporations.
- Temporal and participant constraints: stabilisation must occur within 30 days from the date of issue, and it must be taken in circumstances involving persons within section 274 or sophisticated investors under section 275(2).
For enforcement and risk management, the Regulations also demonstrate MAS’s approach: exemptions are narrow, time-bound, and tied to defined market practices. Practitioners should therefore avoid treating the exemption as a blanket permission. Instead, it should be treated as a safe harbour that must be evidenced and documented—particularly the start date for the 30-day period, the identity of the stabilisation agent, and the classification of relevant counterparties/investors.
Related Legislation
- Securities and Futures Act (Cap. 289) — particularly sections 197, 198, 274, 275(2), and the regulation-making power in section 337(1).
- Futures Act (as referenced in the provided metadata context)
- Stabilising Act (as referenced in the provided metadata context)
- Timeline (as referenced in the provided metadata context)
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. 27) Regulations 2004 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the official text for authoritative provisions.