Statute Details
- Title: Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Notes) (No. 28) Regulations 2005
- Act Code: SFA2001-S473-2005
- Type: Subsidiary Legislation (SL)
- Authorising Act: Securities and Futures Act (Cap. 289)
- Enacting power: Section 337(1) of the Securities and Futures Act
- Commencement: 20 July 2005
- Regulatory status: Current version as at 27 Mar 2026 (per the legislation timeline)
- Key provisions: Section 2 (definitions); Section 3 (exemption)
- Legislative instrument number: SL 473/2005
- Enacting date: Made on 13 July 2005
- Maker: Monetary Authority of Singapore (Managing Director: Heng Swee Keat)
What Is This Legislation About?
The Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Notes) (No. 28) Regulations 2005 (“Stabilising Action Exemption Regulations”) is a targeted exemption regulation. In plain language, it carves out a specific type of market activity—“stabilising action” in relation to a particular set of notes—from certain market conduct restrictions found in the Securities and Futures Act (the “SFA”).
Stabilising action is a practice commonly used in securities offerings to support or maintain the market price of newly issued instruments shortly after issuance. Without an exemption, stabilising purchases or offers to buy could potentially fall within prohibitions or restrictions designed to prevent market manipulation or unfair trading practices. This regulation addresses that tension by allowing stabilising conduct, but only for a defined product, a defined stabiliser, a defined time window, and only when dealing with specified categories of counterparties.
Importantly, the regulation is not a general “market stabilisation” framework. It is narrowly drafted to apply to a particular issuance: “the 5-year US$ fixed rate guaranteed notes due July 2010” issued by GT 2005 Bonds B.V., guaranteed by PT Gajah Tunggal Tbk, and stabilised by Credit Suisse First Boston (Europe) Limited (and related corporations). This makes it highly relevant for practitioners advising on underwriting, distribution, and post-issuance trading strategies for that specific transaction.
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 20 July 2005. For legal practitioners, this matters because the exemption is time-bound and tied to the issuance period; knowing the commencement date helps confirm that the exemption was intended to apply to the relevant issuance and trading window.
2. Definitions: “Notes” and “stabilising action” (Regulation 2)
Regulation 2 is the backbone of the instrument because it defines the scope with precision.
“Notes” are defined as the 5-year US$ fixed rate guaranteed notes due July 2010 issued by GT 2005 Bonds B.V. for a principal amount of up to US$500 million, guaranteed by PT Gajah Tunggal Tbk. This definition is transaction-specific and product-specific. If the instrument is not the defined notes, the exemption does not apply.
“Stabilising action” is defined as an action taken in Singapore or elsewhere by Credit Suisse First Boston (Europe) Limited (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 is also restrictive: it identifies the stabilising entity (Credit Suisse First Boston (Europe) Limited and related corporations) and limits the purpose to stabilisation/price maintenance.
From a compliance perspective, the definition implies that the exemption is not available for stabilising conduct by other market participants, and not for conduct not genuinely aimed at stabilisation/price maintenance.
3. The exemption from sections 197 and 198 of the SFA (Regulation 3)
Regulation 3 is the operative provision. 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 that 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.
In practical terms, the regulation creates a conditional safe harbour: stabilising action is permitted (at least as far as the specified SFA provisions are concerned) if it occurs within the 30-day post-issuance period and is conducted with the specified categories of counterparties.
Although the extract does not reproduce the text of sections 197 and 198, the structure indicates that those sections impose market conduct restrictions that could otherwise capture stabilising trades. The exemption therefore reduces regulatory risk for the stabilising arranger and its related entities when they execute stabilisation strategies in the immediate post-issuance period.
4. Counterparty limitation: section 274 persons and sophisticated investors
The counterparty limitation is a key compliance lever. It means that even if stabilising action is taken by the defined stabiliser and within the defined 30-day window, the exemption will only apply if the stabilising action is taken with a person falling within section 274 or with a sophisticated investor under section 275(2).
For practitioners, this raises immediate diligence questions: who are the counterparties in the stabilising trades? Are they within the statutory categories? Are they “sophisticated investors” under the SFA definition (which typically involves criteria such as net worth, income, or professional experience)? If the stabiliser trades with a counterparty outside these categories, the exemption may not protect the conduct, potentially exposing the stabiliser to the underlying prohibitions in sections 197 and 198.
How Is This Legislation Structured?
The Regulations are short and structured around three provisions:
- Regulation 1 sets out the citation and commencement.
- Regulation 2 provides definitions that precisely identify (i) the Notes and (ii) what counts as stabilising action.
- Regulation 3 contains the exemption, specifying the SFA sections disapplied, the 30-day time limit, and the permitted counterparty categories.
There are no additional parts or schedules in the extract, reflecting the instrument’s narrow, transaction-specific nature.
Who Does This Legislation Apply To?
As a subsidiary regulation, the instrument applies to persons whose conduct falls within its defined scope. In particular, it is relevant to:
- Credit Suisse First Boston (Europe) Limited and its related corporations when they take stabilising actions in relation to the defined Notes; and
- Any other parties involved in the stabilisation process indirectly, insofar as their counterparties must fall within the statutory categories for the exemption to apply.
The exemption is not framed as an obligation; it is a permission/safe harbour. Therefore, it matters most to market participants planning stabilisation trades and to legal advisers assessing whether particular trades are protected from the application of sections 197 and 198 of the SFA.
Additionally, the regulation’s counterparty limitation means that the exemption is effectively conditioned on the identity and status of counterparties—either persons referred to in section 274 or sophisticated investors under section 275(2). Practitioners should therefore treat the counterparty classification as part of the compliance perimeter.
Why Is This Legislation Important?
This regulation is important because it demonstrates how Singapore’s market conduct regime balances two competing policy goals: (1) preventing manipulation and unfair trading practices, and (2) allowing legitimate market practices that support orderly price formation in the immediate aftermath of a securities offering.
By disapplying specified SFA provisions for stabilising action, the Regulations reduce the risk that routine stabilisation activity—when properly structured—would be treated as prohibited market conduct. This is particularly significant for underwriting syndicates and distribution participants, who often need regulatory clarity to execute stabilisation strategies within tight timeframes.
From a practitioner’s standpoint, the most consequential features are the narrow product definition, the restricted stabiliser definition, the 30-day post-issuance limit, and the counterparty eligibility requirement. These are the elements most likely to be tested in any compliance review or regulatory inquiry. If any element is not satisfied—wrong notes, wrong stabiliser, trading outside the 30-day window, or trading with ineligible counterparties—the exemption may not apply, and the underlying SFA prohibitions could become relevant.
Related Legislation
- Securities and Futures Act (Cap. 289) — in particular:
- Sections 197 and 198 (market conduct provisions disapplied by this exemption)
- Section 274 (persons eligible for the exemption)
- Section 275(2) (definition of “sophisticated investor”)
- Section 337(1) (authorising power for making exemption regulations)
- Futures Act (listed in the provided metadata as related context)
- Stabilising Act (listed in the provided metadata as related context)
- Timeline (legislation timeline reference for version control)
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 2005 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the official text for authoritative provisions.