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 (SFA) (notably section 337(1))
- Enacting authority: Monetary Authority of Singapore (MAS)
- Commencement: 24 June 2004
- Legislative status: Current version as at 27 March 2026 (per the provided extract)
- Legislative instrument number: SL 360/2004
- Key provisions: Section 1 (Citation and commencement), 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 that creates a narrow exemption from certain market conduct rules under the Securities and Futures Act (SFA). In plain terms, it allows specified “stabilising action” to be taken in relation to a particular issuance of exchangeable notes, without triggering the prohibitions in the referenced SFA provisions.
Market conduct rules in the SFA are designed to protect market integrity—particularly by restricting conduct that could artificially influence prices or mislead investors. However, in some capital markets transactions, stabilisation is permitted under controlled conditions because it can reduce volatility in the immediate aftermath of an issuance. This set of Regulations is one such permission: it carves out a limited exemption for stabilisation activities connected to a defined set of notes.
Crucially, the exemption is not general. It is tied to (i) a specific instrument (“Notes”), (ii) a specific stabilising actor (Goldman Sachs International and related corporations), and (iii) a defined time window (within 30 days from the date of issue). It also limits the exemption to stabilising actions involving certain categories of counterparties—namely persons referred to in section 274 of the SFA or sophisticated investors as defined in section 275(2) of the SFA.
What Are the Key Provisions?
Section 1 (Citation and commencement) provides the formal citation and states that the Regulations come into operation on 24 June 2004. For practitioners, this matters when assessing whether stabilising conduct occurred within the legal framework of the exemption.
Section 2 (Definitions) is the heart of the instrument because it defines the scope of the exemption. Two defined terms are central:
(a) “Notes” are precisely described 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. The notes are exchangeable into existing ordinary shares of Formosa Petrochemical Corporation with a par value of NT$10 each. This specificity means the exemption is transaction-specific; it does not automatically extend to other issuances, other maturities, or other exchangeable note structures.
(b) “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. The definition is broad enough to include not only actual purchases but also offers or agreements to purchase—yet it remains anchored to the stabilisation purpose.
Section 3 (Exemption) provides the operative legal effect. 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, with stabilising action involving 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.
From a practitioner’s perspective, this is a three-part gating mechanism:
- Time limitation: stabilising action must occur within 30 days from the date of issue of the Notes. Conduct outside that window would not benefit from the exemption.
- Instrument limitation: the action must relate to the defined “Notes” only.
- Counterparty limitation: the stabilising action must be taken with a counterparty that falls within the SFA categories (section 274 persons or sophisticated investors). This ensures that the exemption is not used in a way that could expose retail investors to potentially price-influencing conduct without appropriate safeguards.
Although the extract does not reproduce sections 197 and 198 of the SFA, the structure indicates that those sections contain prohibitions or restrictions relevant to market conduct. The Regulations effectively suspend those prohibitions for the specified stabilisation activity, thereby permitting conduct that would otherwise be unlawful.
How Is This Legislation Structured?
The Regulations are short and structured around three provisions:
- Section 1 sets out the citation and commencement date.
- Section 2 provides definitions that determine the scope of the exemption—especially the precise identification of the “Notes” and the definition of “stabilising action”.
- Section 3 contains the exemption from specified SFA provisions (sections 197 and 198), subject to strict conditions (time window, defined notes, and permitted counterparty categories).
There are no additional parts or schedules in the provided extract, reflecting the instrument’s function as a narrowly tailored exemption rather than a comprehensive regulatory code.
Who Does This Legislation Apply To?
The exemption is directed at stabilising action taken by Goldman Sachs International or its related corporations. That means the Regulations are primarily relevant to the stabilising dealer/arranger and its corporate group entities that may execute or support stabilisation activities.
However, the exemption also depends on the counterparty involved in the stabilising action. Section 3 limits the exemption to stabilising actions taken with a person referred to in section 274 of the SFA or with a sophisticated investor under section 275(2). Practically, this requires transaction teams to confirm the status of counterparties and ensure that stabilisation trades are executed within the permitted category.
Because the “Notes” are defined with high specificity, the Regulations apply only in relation to that particular issuance (Formosa Chemicals & Fibre Corporation’s 7-year zero coupon exchangeable notes due June 2011, up to US$250 million, exchangeable into Formosa Petrochemical Corporation ordinary shares). If a different note issuance is involved, the exemption would not automatically apply.
Why Is This Legislation Important?
This Regulations instrument is important because it demonstrates how Singapore’s market conduct framework balances market integrity with practical capital markets mechanics. Stabilisation can be a legitimate tool to manage price discovery and reduce excessive volatility after issuance. Without an exemption, stabilisation-related buying or commitments could fall within prohibitions intended to prevent market manipulation.
For practitioners, the key significance lies in the precision of the exemption. The Regulations do not provide a blanket permission for stabilisation. Instead, they require strict compliance with defined parameters: the exact notes, the exact stabilising actor, the 30-day post-issue window, and the counterparty categories. This precision is a compliance safeguard and a litigation risk reducer—if any condition is not met, the exemption may fail and the underlying SFA prohibitions could apply.
In enforcement and compliance terms, the Regulations also highlight the need for robust transaction documentation. Legal teams should ensure that stabilisation activities are recorded in a way that supports the exemption elements—particularly evidence of (i) the date of issue, (ii) the timing of stabilisation trades, (iii) the identity of the stabilising entity executing the trades, (iv) that the instruments traded are the defined “Notes”, and (v) that counterparties satisfy the section 274 or sophisticated investor criteria.
Related Legislation
- Securities and Futures Act (SFA) (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 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. 28) Regulations 2004 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the official text for authoritative provisions.