Statute Details
- Title: Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Notes) (No. 3) Regulations 2005
- Act Code: SFA2001-S41-2005
- Type: Subsidiary Legislation (SL)
- Authorising Act: Securities and Futures Act (Cap. 289) — made under section 337(1)
- Commencement: 20 January 2005
- Enacting instrument: Monetary Authority of Singapore (MAS)
- Key Provisions:
- Section 1: Citation and commencement
- Section 2: Definitions (including “Notes” and “stabilising action”)
- Section 3: Exemption from specified market conduct provisions
- Regulatory focus: Exemption for stabilising market price through permitted dealings in specified notes
- Legislative status: Current version as at 27 March 2026 (per the provided extract)
What Is This Legislation About?
The Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Notes) (No. 3) Regulations 2005 is a targeted regulatory instrument. In plain language, it creates a limited exemption from certain “market conduct” restrictions in the Securities and Futures Act (SFA) for a specific kind of activity—namely, stabilising action—carried out in relation to a particular issue of notes.
Market conduct rules in the SFA are designed to protect market integrity. They generally restrict conduct that could mislead investors or distort the market, including certain dealing practices around the issuance and trading of securities. However, in some capital markets transactions, it is common for underwriters or dealers to take stabilising steps to prevent excessive volatility immediately after issuance. This regulation recognises that commercial reality and provides a narrow legal pathway for stabilisation, but only for defined circumstances.
Importantly, this is not a general stabilisation regime for all securities. It is an exemption regulation tied to a specific set of notes and a specific stabilising actor (Citigroup Global Markets Inc. and related corporations), and it applies only within a defined time window after issuance.
What Are the Key Provisions?
Section 1 (Citation and commencement) confirms the legal identity of the instrument and when it takes effect. The regulations may be cited as the “Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Notes) (No. 3) Regulations 2005” and come into operation on 20 January 2005. For practitioners, commencement matters because exemptions can only be relied upon if the stabilising action occurs after the regulation is in force.
Section 2 (Definitions) is the heart of the instrument’s scope. It defines two key terms:
- “Notes”: the regulation specifies the exact securities covered. The notes are described as 10-year US$ senior fixed rate notes due January 2015 issued by City Telecom (H.K.) Limited for a principal amount of up to US$150 million.
- “stabilising action”: this is defined as an action taken in Singapore or elsewhere by Citigroup Global Markets Inc. (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.
These definitions are legally significant because the exemption in section 3 only applies if the conduct fits within both definitions. If a different issuer, different notes, or a different dealer (not within the defined Citigroup group) is involved, the exemption would not be available.
Section 3 (Exemption) provides the operative relief. It states that sections 197 and 198 of the Act shall not apply to stabilising action taken in respect of any of the Notes, within 30 days from the date of issue, with respect to stabilising action taken by 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 practical terms, section 3 carves out a narrow exception to the SFA’s market conduct prohibitions. The exemption is time-limited (30 days from issue) and is conditional on the stabilising action being undertaken by the relevant category of persons under the SFA framework. For counsel advising an issuer, arranger, or dealer, the key questions become: (1) are the notes exactly those described; (2) is the stabilising activity within the defined “stabilising action”; (3) is it carried out within the 30-day period; and (4) is the counterparty or participant within the categories in section 274 or within the sophisticated investor definition in section 275(2).
While the extract does not reproduce the text of sections 197 and 198, the structure indicates that those provisions contain restrictions that would otherwise capture stabilising dealings. The regulation’s drafting approach—“shall not apply”—means that, for the specified stabilising action, the prohibitions are effectively suspended or excluded. This is a classic legislative technique to permit regulated market practices without undermining the overall market integrity framework.
How Is This Legislation Structured?
The regulations are concise and consist of three substantive provisions:
- Section 1: Citation and commencement (procedural)
- Section 2: Definitions (substantive scope-setting)
- Section 3: Exemption (operative legal effect)
There are no additional parts or complex schedules in the provided extract. The instrument is therefore best understood as a transaction-specific exemption that relies heavily on precise definitions. From a drafting and compliance perspective, the brevity is intentional: it reduces interpretive uncertainty by hard-coding the notes and the stabilising actor, and by limiting the exemption to a defined period and defined categories of persons.
Who Does This Legislation Apply To?
This legislation applies to stabilising action in relation to the specified “Notes” (City Telecom (H.K.) Limited’s 10-year US$ senior fixed rate notes due January 2015, up to US$150 million). It is not a general exemption for all note issuances or all stabilisation activities.
As to persons, the regulation focuses on stabilising action taken by Citigroup Global Markets Inc. or its related corporations, and it further conditions the exemption on the stabilising action being taken with a person falling within section 274 of the SFA or with a sophisticated investor under section 275(2). Practitioners should therefore treat the exemption as relevant primarily to the dealer/underwriter group conducting stabilisation and to the counterparties involved in those dealings, ensuring that the counterparties meet the statutory categories.
Why Is This Legislation Important?
This regulation matters because stabilisation is a common feature of international debt capital markets. Without an exemption, stabilising purchases or offers to buy could potentially fall within market conduct prohibitions, exposing market participants to regulatory risk. By carving out stabilising action from the application of sections 197 and 198 of the SFA, the regulation provides legal certainty for permitted stabilisation practices—so long as the strict conditions are met.
For lawyers, the key value is compliance clarity. The regulation’s definitions and conditions create a checklist approach: confirm the identity of the notes, confirm the stabilising actor, confirm the timing (within 30 days from issue), and confirm the relevant person category (section 274 persons or sophisticated investors). This reduces the need for broad interpretive arguments and supports more defensible regulatory positions.
From an enforcement and risk-management perspective, the narrowness of the exemption is equally important. Because the exemption is limited to specified notes and a defined stabilisation framework, any stabilising activity outside the defined scope could still trigger the underlying prohibitions in the SFA. Counsel should therefore ensure that internal trading controls, documentation, and communications reflect the exemption’s boundaries—particularly the 30-day window and the eligibility of counterparties.
Related Legislation
- Securities and Futures Act (Cap. 289) — in particular, sections 197, 198, 274, 275(2), and 337(1)
- Futures Act (as referenced in the provided metadata context)
- Stabilising Act (as referenced in the provided metadata context)
- Timeline (legislation timeline reference 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. 3) Regulations 2005 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the official text for authoritative provisions.