Statute Details
- Title: Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Notes) (No. 28) Regulations 2004
- Act Code: SFA2001-S360-2004
- Type: Subsidiary Legislation (sl)
- Enacting Authority: Monetary Authority of Singapore (MAS)
- Authorising Act: Securities and Futures Act (Cap. 289), specifically section 337(1)
- Citation: S 360/2004
- Commencement: 24 June 2004
- Status: Current version as at 27 Mar 2026 (per provided extract)
- Key Provisions: Section 2 (definitions); Section 3 (exemption)
What Is This Legislation About?
The Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Notes) (No. 28) Regulations 2004 is a targeted regulatory instrument. In plain terms, it creates a limited exemption from certain “market conduct” rules in the Securities and Futures Act (the “SFA”) for stabilising activities carried out in relation to a specific structured debt instrument: a particular series of exchangeable notes issued by Formosa Chemicals & Fibre Corporation.
Market conduct provisions in the SFA are designed to prevent manipulative or misleading trading practices and to ensure fair and orderly markets. However, in some capital markets transactions—especially those involving new issuances—market stabilisation may be permitted under controlled conditions. Stabilisation typically involves buying (or offering to buy) securities to support or maintain their market price during an initial period after issuance, thereby reducing volatility and supporting price discovery.
This set of Regulations does not create a general stabilisation regime. Instead, it carves out an exemption for stabilising action taken in respect of “Notes” that are precisely defined in the Regulations, and only if the stabilising action occurs within a defined time window and is undertaken by specified categories of persons (or in favour of specified investor types). The exemption is therefore narrow, transaction-specific, and time-limited.
What Are the Key Provisions?
1. Citation and commencement (Regulation 1)
Regulation 1 provides the short title and states that the Regulations come into operation on 24 June 2004. This matters for practitioners because the exemption in Regulation 3 is tied to a “within 30 days from the date of issue” condition; knowing the commencement date helps confirm the regulatory framework applicable at the time stabilisation activities were planned and executed.
2. Definitions (Regulation 2)
Regulation 2 is crucial because it defines both the instrument and the activity that qualify for the exemption.
“Notes” are defined as the 7-year zero coupon exchangeable notes due June 2011 issued by Formosa Chemicals & Fibre Corporation for a principal amount of up to US$250 million. These notes are exchangeable into existing ordinary shares of Formosa Petrochemical Corporation with a par value of NT$10 each. The definition is highly specific—down to the issuer, maturity, coupon structure, exchangeable shares, and maximum principal amount—meaning the exemption cannot be extended to other note issues or similar instruments.
“Stabilising action” is defined 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 definition captures both actual purchases and commitments/undertakings to buy, and it expressly permits stabilisation activities outside Singapore as long as the action is within the defined stabilising framework.
3. The exemption from sections 197 and 198 of the SFA (Regulation 3)
The heart of the Regulations is Regulation 3. It provides that sections 197 and 198 of the Act shall not apply to any stabilising action taken in respect of the defined Notes, within 30 days from the date of issue, with two alternative qualification routes:
- (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, this means the stabilising activity is exempt from the prohibitions or restrictions contained in sections 197 and 198—whatever their precise content—provided that the stabilisation is (i) within the 30-day post-issuance window, (ii) carried out in relation to the specific Notes, and (iii) undertaken by (or in relation to) the relevant category of persons/investors described in section 274 or section 275(2).
Time limitation is a strict condition. The exemption is not indefinite. If stabilising action occurs outside the 30-day period, the exemption would not apply, and the underlying SFA provisions would presumably resume full effect.
Person/investor qualification is also essential. The exemption is not simply “anyone can stabilise.” It is tied to the categories in the SFA. For practitioners, this is often where compliance work concentrates: confirming the identity of the stabilising entity (here, Goldman Sachs International and related corporations are defined for “stabilising action”), and ensuring the transaction context fits within the relevant SFA-defined persons or sophisticated investor framework.
4. Enactment date and signature
The Regulations were made on 21 June 2004 by the Managing Director of MAS, KOH YONG GUAN. While not a substantive provision, it is relevant for understanding the regulatory timeline and for documenting the formal authorisation of the exemption.
How Is This Legislation Structured?
This is a short, focused subsidiary instrument consisting of an enacting formula and three substantive regulations:
- Regulation 1 (Citation and commencement): sets the short title and commencement date.
- Regulation 2 (Definitions): defines “Notes” and “stabilising action” with transaction-specific precision.
- Regulation 3 (Exemption): provides the exemption from specified SFA provisions (sections 197 and 198) for stabilising action meeting the defined criteria (30-day window; specified persons/investor categories).
Notably, the Regulations do not contain extensive procedural requirements, reporting obligations, or detailed stabilisation mechanics in the extract provided. Instead, the legal effect is achieved through the exemption clause and the narrow definitions.
Who Does This Legislation Apply To?
The Regulations apply to stabilising action taken in respect of the defined “Notes” (the Formosa exchangeable notes) and only where the stabilising action meets the definition in Regulation 2. The definition of “stabilising action” specifically points to actions by Goldman Sachs International or its related corporations. Therefore, the practical beneficiaries and regulated actors are those entities acting within that stabilisation framework.
Additionally, Regulation 3 conditions the exemption on the stabilising action being taken within 30 days from the date of issue and being carried out with respect to either (i) a person referred to in section 274 of the SFA or (ii) a sophisticated investor as defined in section 275(2). This means the exemption is not purely entity-based; it is also context-based, depending on the relevant SFA-defined person/investor status associated with the stabilising activity.
Why Is This Legislation Important?
This Regulations is important because it illustrates how Singapore’s market conduct framework balances two competing objectives: (1) preventing market manipulation and maintaining integrity, and (2) allowing legitimate market stabilisation in connection with new issuances. By exempting stabilising action from particular SFA provisions, MAS enables transaction participants to carry out stabilisation activities that may be commercially necessary and widely used in capital markets, while still keeping the exemption tightly controlled.
For practitioners, the key significance lies in the narrow scope and compliance triggers. The exemption is limited to a specific note issue and a specific stabilisation actor definition. It is also time-bound (30 days from issuance). These features reduce regulatory uncertainty for the transaction, but they increase the need for careful documentation and monitoring. If stabilisation is planned, counsel should ensure that the stabilising activities are structured to fall squarely within the exemption’s definitions and conditions.
From an enforcement perspective, the exemption clause signals that stabilisation is permissible only within the defined boundaries. If stabilising action is undertaken outside the permitted window or outside the relevant person/investor categories, the exemption would not apply, exposing the stabilising party to potential regulatory consequences under the underlying SFA provisions (sections 197 and 198). Accordingly, this instrument is not merely a “formality”; it is a compliance gatekeeper.
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)
- Stabilising Act (as referenced in the provided metadata)
- 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. 28) Regulations 2004 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the official text for authoritative provisions.