Statute Details
- Title: Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Notes) (No. 29) Regulations 2004
- Act Code: SFA2001-S363-2004
- 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 363/2004
- Commencement: 25 June 2004
- Status: Current version as at 27 March 2026 (per legislation portal)
- Key provisions:
- Section 1: Citation and commencement
- Section 2: Definitions (“Notes”, “stabilising action”)
- Section 3: Exemption from Sections 197 and 198 of the Securities and Futures Act
- Related legislation (context): Securities and Futures Act; provisions on market conduct; stabilising action concepts under the regulatory framework
What Is This Legislation About?
The Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Notes) (No. 29) Regulations 2004 (“Stabilising Notes Regulations”) is a targeted regulatory instrument. In practical terms, it creates a narrow exemption from certain market conduct prohibitions in the Securities and Futures Act (“SFA”) for a specific kind of market activity—namely, “stabilising action”—conducted in relation to a defined bond/notes issuance.
Stabilisation is a familiar feature of capital markets. When new debt securities are issued, market makers or arrangers may take steps to support or “stabilise” the trading price in the immediate aftermath of issuance. Without an exemption, such conduct could be caught by general prohibitions on market manipulation or improper dealing. This Regulations therefore permits stabilising activity, but only within strict boundaries: it is limited to a particular notes issuance, a defined stabiliser, and a limited time window after issuance.
Although the Regulations are short (three sections), they are legally significant because they carve out an exception to the SFA’s market conduct regime. For practitioners, the key is to understand exactly what conduct is exempted, who may conduct it, what instruments are covered, and when the exemption applies. The Regulations are not a general authorisation for all stabilisation; they are an instrument for a specific transaction and specific parties.
What Are the Key Provisions?
Section 1 (Citation and commencement) is straightforward. It provides the short title and states that the Regulations come into operation on 25 June 2004. For legal analysis, commencement matters because exemptions must be in force at the time the relevant stabilising action is taken.
Section 2 (Definitions) is where the scope is effectively “locked in.” The Regulations define two critical terms: “Notes” and “stabilising action.”
“Notes” are defined as the 5-year fixed rate senior notes due July 2009 issued by LG TeleCom, Ltd. for a principal amount of up to US$300 million. This is a transaction-specific definition. It means that even if stabilisation is performed for other notes (even similar ones), the exemption will not apply unless the notes fall within this definition.
“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 important for two reasons.
First, it identifies the authorised stabiliser (Credit Suisse First Boston (Europe) Limited and related corporations). Second, it clarifies the permitted conduct (buying, offering to buy, or agreeing to buy). The “purpose” element—stabilising or maintaining market price—also matters. If the dealing is not genuinely for stabilisation (or is for a different objective), the exemption may be challenged.
Section 3 (Exemption) 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 respect to either:
- (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 plain language, Section 3 creates a time-limited “safe harbour” from the SFA’s prohibitions in Sections 197 and 198, but only for stabilising action that is directed at certain categories of counterparties (section 274 persons or sophisticated investors) and only during the first 30 days after issuance.
For practitioners, the counterparty limitation is often the most overlooked aspect. Even if the stabiliser and the notes are correct, the exemption may not apply if the stabilising dealing is not with (or not in relation to) the relevant categories of persons. Accordingly, counsel should verify the identity and regulatory status of counterparties involved in stabilising trades, and ensure the dealing documentation aligns with the intended exemption.
Finally, the time limitation—within 30 days from the date of issue—is critical. Stabilisation activities outside that window would not be covered by this exemption and could expose the stabiliser (and potentially other market participants) to the underlying prohibitions in Sections 197 and 198.
How Is This Legislation Structured?
The Regulations are structured as a compact instrument with three substantive sections:
- Section 1 sets out the citation and commencement.
- Section 2 provides definitions that determine the scope of the exemption—specifically, what “Notes” are covered and what counts as “stabilising action,” including the identity of the stabiliser and the nature of the transactions.
- Section 3 contains the exemption from specified SFA provisions (Sections 197 and 198), limited by time (30 days from issue) and by the relevant categories of persons (section 274 persons or sophisticated investors).
Because the Regulations are short, the legal analysis largely turns on interpreting the defined terms and applying the exemption conditions to the facts of the stabilisation programme.
Who Does This Legislation Apply To?
The exemption is designed for a particular stabilisation scenario. It applies to stabilising action taken by Credit Suisse First Boston (Europe) Limited and its related corporations, in relation to the defined LG TeleCom, Ltd. notes. The Regulations therefore do not generally apply to all issuers, all underwriters, or all market participants—only to the stabiliser and notes identified in the definitions.
Additionally, Section 3 limits the exemption to stabilising action undertaken within 30 days from the date of issue and where the dealing is with (or in relation to) a person referred to in section 274 of the SFA or a sophisticated investor under section 275(2). Practically, this means that even within the stabiliser’s programme, the exemption may be conditional on the counterparty classification and the manner in which the stabilising transactions are structured.
Why Is This Legislation Important?
Although the Regulations are narrow, they are important because they address a recurring tension in securities regulation: stabilisation can be commercially necessary and market-practice common, but it can also resemble conduct that regulators treat as potentially manipulative. By exempting stabilising action from specific market conduct provisions, the Regulations provide legal certainty for a defined issuance and defined stabiliser.
For practitioners advising issuers, arrangers, or stabilising agents, the Regulations offer a clear compliance pathway: if the stabilisation falls within the defined “Notes,” is carried out by the defined stabiliser (or related corporations), is undertaken within the specified 30-day period, and involves the relevant categories of persons, then Sections 197 and 198 of the SFA will not apply. This reduces regulatory risk and supports the structuring of stabilisation programmes.
Conversely, the Regulations also highlight the compliance risk of assuming that stabilisation is automatically permitted. Because the exemption is transaction-specific and time-limited, counsel should not treat it as a general template. Instead, each stabilisation programme should be assessed against the definitions and conditions. Where the stabiliser, the instrument, the timing, or the counterparty category differs, the exemption may not apply, and the underlying prohibitions could become relevant.
Related Legislation
- Securities and Futures Act (Cap. 289) — including Sections 197 and 198 (market conduct prohibitions referenced by the exemption), and Sections 274 and 275(2) (counterparty categories relevant to the exemption).
- Securities and Futures (Market Conduct) framework — the broader regulatory context governing dealing conduct and exemptions.
- Stabilising action regulatory concepts — as reflected in the SFA’s scheme and any related subsidiary legislation or guidance applicable to stabilisation programmes.
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. 29) Regulations 2004 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the official text for authoritative provisions.