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)
- Authorising Act: Securities and Futures Act (Cap. 289)
- Power Used: Section 337(1) of the Securities and Futures Act
- Enacting Body: Monetary Authority of Singapore (MAS)
- Commencement: 24 June 2004
- Key Provisions: Section 2 (definitions); Section 3 (exemption)
- Regulatory Status (as provided): Current version as at 27 Mar 2026
- Legislation Identifier (as provided): SL 360/2004
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 (“Stabilising Action Exemption Regulations”) is a narrow, transaction-specific regulatory instrument. In plain language, it creates a legal exemption from certain market conduct rules in the Securities and Futures Act (“SFA”) for a particular kind of trading activity—namely, stabilising actions—carried out in relation to a defined set of debt securities (“Notes”).
Stabilisation is a common market practice in capital markets. When new securities are issued, market prices can fluctuate sharply due to initial supply and demand. Stabilising actions are intended to reduce disorderly trading and support orderly price formation, typically during an initial post-issuance period. However, stabilisation can also resemble conduct that market conduct rules are designed to prevent—such as manipulation or misleading price support—so regulators often require clear statutory authority for stabilisation to be lawful.
These Regulations therefore do not create a general permission for stabilisation across all securities. Instead, they precisely define the Notes, the stabilising actor, and the time window in which stabilising action may be taken. They also identify the categories of counterparties/investors to whom the exemption applies. The result is a tightly bounded exemption that allows stabilising activity while maintaining the integrity of Singapore’s securities markets.
What Are the Key Provisions?
1. Citation and commencement (Regulation 1)
Regulation 1 provides the citation and 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. 28) Regulations 2004” and come into operation on 24 June 2004. For practitioners, this matters when assessing whether stabilising conduct occurred within the lawful period and whether any enforcement analysis turns on the timing of regulatory authority.
2. Definitions: “Notes” and “stabilising action” (Regulation 2)
Regulation 2 is central because it defines the scope of the exemption. Two defined terms drive the entire instrument:
- “Notes” means 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.
- “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, this definition is both protective and restrictive. It is protective because it identifies the stabilising actor (Goldman Sachs International and related corporations) and the purpose (stabilise or maintain market price). It is restrictive because it limits stabilisation to the specified Notes and to the specified stabilising actor group.
3. The exemption from SFA sections 197 and 198 (Regulation 3)
Regulation 3 is the operative provision. It states that Sections 197 and 198 of the Act shall not apply to any stabilising action taken in respect of any of the Notes, within 30 days from the date of issue of the Notes, with two alternative conditions as to the relevant counterparty category:
- 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.
Although the extract provided does not reproduce the text of SFA sections 197, 198, 274, and 275, the structure indicates that the exemption is designed to carve out stabilising conduct from certain prohibitions or restrictions in the SFA, but only for stabilising actions that occur within a defined post-issuance period and only when the counterparty falls within specified investor categories.
Practical implications of the 30-day window
The exemption is time-limited. Stabilising action must be taken within 30 days from the date of issue of the Notes. This is a key compliance checkpoint. Market participants typically maintain detailed trade logs, approvals, and evidence of the issuance date and the timing of each stabilising transaction. If stabilisation continues beyond the 30-day period, the exemption would no longer apply, and the underlying SFA market conduct provisions would potentially become enforceable.
Practical implications of the counterparty categories
The exemption is also conditional on who the stabilising action is taken with. The Regulations allow stabilising action (within the 30-day period) only when the counterparty is either (a) a person referred to in section 274 of the Act or (b) a sophisticated investor under section 275(2). This means that even if the stabilising actor and the Notes are correct, a stabilising trade with an ineligible counterparty could fall outside the exemption and expose the conduct to the general market conduct rules.
4. Enactment and making date
The Regulations were made on 21 June 2004 and signed by Koh Yong Guan, Managing Director of MAS. For practitioners, the making date may be relevant for understanding the regulatory timeline, although the operative commencement date is 24 June 2004.
How Is This Legislation Structured?
The Regulations are extremely short and consist of an enacting formula and three substantive provisions:
- Regulation 1 (Citation and commencement) sets out the name and the commencement date.
- Regulation 2 (Definitions) defines “Notes” and “stabilising action,” which effectively determine the scope of what conduct is covered.
- Regulation 3 (Exemption) provides the exemption from specified SFA provisions (sections 197 and 198) for stabilising action in respect of the defined Notes, subject to the 30-day limit and the counterparty conditions.
There are no additional parts, schedules, or detailed procedural requirements in the extract. The legislative design is therefore “precision by definition”: the Regulations rely on tightly drafted definitions and a narrow exemption rather than on extensive compliance mechanics.
Who Does This Legislation Apply To?
Primary regulated parties are those who may take “stabilising action” as defined. The definition restricts stabilising action to actions taken by Goldman Sachs International or its related corporations. Accordingly, the exemption is practically relevant to that stabilising group and to any entities acting on their behalf within the corporate group.
Counterparty scope is also limited. Even where the stabilising actor is correct, the exemption only applies to stabilising actions taken within the 30-day period when the counterparty is either a person referred to in section 274 of the SFA or a sophisticated investor under section 275(2). Lawyers advising on stabilisation programmes must therefore confirm not only the transaction mechanics but also the investor classification and the legal basis for treating the counterparty as falling within those categories.
Why Is This Legislation Important?
This Regulations matters because stabilisation sits at the intersection of market liquidity support and market integrity. Without an exemption, conduct intended to stabilise prices could be characterised as prohibited market conduct under the SFA. By expressly exempting stabilising action from sections 197 and 198 (for the specified Notes and conditions), MAS provides legal certainty for a controlled stabilisation process.
For practitioners, the value is twofold. First, it identifies the exact securities and exact stabilising actor for which stabilisation is authorised. Second, it imposes clear temporal and counterparty constraints—the 30-day post-issuance window and the requirement that counterparties fall within specified investor categories. These constraints are the practical compliance levers: they determine whether stabilising trades are protected by the exemption or whether they risk falling back into the general prohibitions.
In advisory work, this instrument would typically be used when reviewing or drafting documentation for an exchangeable notes issuance, including stabilisation arrangements, dealer roles, and investor eligibility. It may also be relevant in post-trade compliance reviews, where regulators or internal audit teams assess whether stabilising activity was conducted within the statutory safe harbour.
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 provided metadata)
- Stabilising Act (as referenced in the provided metadata)
- Timeline (legislation timeline reference as provided in the 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.