Statute Details
- Title: Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Notes) (No. 32) Regulations 2004
- Act Code: SFA2001-S422-2004
- Legislative Type: Subsidiary legislation (SL)
- Authorising Act: Securities and Futures Act (SFA), specifically section 337(1)
- Commencement: 12 July 2004
- Regulation Number: SL 422/2004
- Status: Current version as at 27 Mar 2026 (per provided extract)
- Enacting Formula (maker): Monetary Authority of Singapore (MAS)
- 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 for specified stabilising action
What Is This Legislation About?
The Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Notes) (No. 32) Regulations 2004 is a targeted regulatory instrument that creates a narrow exemption from certain market conduct prohibitions under the Securities and Futures Act (SFA). In plain terms, it allows a specific type of “market stabilisation” trading activity to occur in relation to a defined issuance of notes, without triggering the general restrictions that would otherwise apply.
Market stabilisation is a common feature of certain debt capital markets transactions. When new notes are issued, the initial trading price can be volatile. Under stabilisation arrangements, a financial institution may buy (or offer to buy) the notes during a limited period to help maintain orderly market conditions and reduce extreme price fluctuations. This legislation recognises that such activity—if properly constrained—can serve legitimate market functions rather than constitute prohibited market manipulation.
Importantly, the exemption is not general. It is tied to a particular set of notes (US$ fixed rate notes to be issued by Korea Southern Power Co., Ltd. in July 2004, up to US$150 million) and to stabilising actions taken by Barclays Bank PLC (or related corporations). It also limits the exemption to dealings within a defined timeframe after issuance (30 days from the date of issue) and only when the counterparty is within specified categories (persons referred to in section 274 of the SFA, or “sophisticated investors” as defined in section 275(2) of the SFA).
What Are the Key Provisions?
1. Citation and commencement (Section 1)
Section 1 provides the formal citation and states that the Regulations came into operation on 12 July 2004. For practitioners, this matters mainly for determining the regulatory framework applicable to any stabilisation activity undertaken around the issuance date.
2. Definitions that confine the exemption (Section 2)
Section 2 is the gatekeeper. It defines two critical terms:
- “Notes” are expressly defined as the US$ fixed rate notes to be issued by Korea Southern Power Co., Ltd. in July 2004 for a principal amount of up to US$150 million. This means the exemption does not extend to other issuers, other note tranches, or other currencies or structures.
- “stabilising action” is defined as an action taken in Singapore or elsewhere by Barclays Bank PLC (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 captures not only actual purchases but also offers or agreements to buy—so contractual commitments can fall within the exemption if they are part of the stabilisation strategy.
From a compliance perspective, these definitions are crucial because they determine whether a particular trading or dealing activity is “in respect of” the relevant notes and whether it is performed by the relevant stabilising entity (Barclays Bank PLC or its related corporations). Any deviation—such as stabilisation by a different bank, or dealing in different instruments—would likely fall outside the exemption.
3. The exemption from SFA sections 197 and 198 (Section 3)
Section 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, with dealings involving 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.
While the extract does not reproduce the text of sections 197 and 198, the legal effect is clear: the Regulations carve out stabilising activity from the reach of those market conduct provisions. In practice, this means that stabilisation trading—within the defined scope—should not be treated as a breach of the relevant prohibitions that would otherwise apply to dealings in securities or related instruments.
Time limitation (30 days from issue)
The exemption is explicitly time-bound. Stabilising action must be taken within 30 days from the date of issue of the Notes. This is a common feature of stabilisation regimes: it prevents indefinite “support” of prices and confines the exemption to the period when market price formation is most sensitive.
Counterparty limitation (section 274 persons or sophisticated investors)
The exemption is also limited by who the stabilising trades may be with. The stabilising action must be taken with a person falling within section 274 of the SFA or with a sophisticated investor under section 275(2). This limitation is designed to ensure that the exemption operates in a controlled distribution and dealing environment, rather than enabling stabilisation against retail or unsophisticated counterparties.
Practical compliance takeaway
A lawyer advising a stabilising bank or arranger would typically focus on: (i) whether the instrument is exactly the defined “Notes”; (ii) whether the stabilising entity is Barclays Bank PLC or a related corporation; (iii) whether the activity is within 30 days of issue; and (iv) whether the counterparties meet the section 274 / sophisticated investor criteria. Each element is a potential “failure point” that could remove the benefit of the exemption.
How Is This Legislation Structured?
The Regulations are structured in a straightforward, short-form manner, consisting of:
- Section 1 (Citation and commencement): identifies the Regulations and their effective date (12 July 2004).
- Section 2 (Definitions): defines “Notes” and “stabilising action” to tightly confine the exemption.
- Section 3 (Exemption): provides the substantive carve-out from SFA sections 197 and 198, subject to the time and counterparty limitations.
There are no additional parts or complex procedural provisions in the extract. The legal drafting technique is to use definitions and a single operative exemption clause to achieve a narrow regulatory outcome.
Who Does This Legislation Apply To?
This legislation applies to stabilising action taken in relation to the defined Notes, but only when the stabilising action is taken by Barclays Bank PLC or its related corporations. Therefore, the primary regulated parties are the entities actually conducting the stabilisation trading activity.
It also indirectly affects other transaction participants—such as arrangers, dealers, and issuers—because the exemption determines what trading conduct is permissible without breaching the specified SFA provisions. However, the exemption is framed as a limitation on the application of sections 197 and 198, rather than as a direct obligation on issuers. In practice, issuers and arrangers will still need to ensure that stabilisation arrangements are properly documented and that the stabilising bank’s conduct falls within the exemption’s conditions.
Why Is This Legislation Important?
Although the Regulations are brief, they are significant for market practice because they provide legal certainty for a specific stabilisation programme. Without an exemption, stabilisation activity could potentially be scrutinised under general market conduct rules that aim to prevent manipulation or misleading market behaviour. By carving out stabilising action within defined boundaries, the Regulations support the functioning of debt issuance markets while maintaining regulatory safeguards.
For practitioners, the value lies in the precision of the exemption. The Regulations do not attempt to regulate stabilisation broadly; instead, they define the exact notes, the exact stabilising actor, the exact period, and the exact counterparty categories. This precision reduces ambiguity and helps compliance teams design trading protocols that can be defended if later questioned by regulators or in litigation.
From an enforcement standpoint, the exemption’s narrowness means that conduct outside its terms may still attract liability under the underlying SFA provisions (sections 197 and 198). Accordingly, lawyers should treat the exemption as conditional and ensure that internal controls—such as trade capture, counterparty classification, and time-stamping relative to the issue date—are robust.
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)
- Stabilising Act (as referenced in the provided metadata)
- Legislation Timeline / MAS legislation timeline (for version control and amendment history)
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. 32) Regulations 2004 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the official text for authoritative provisions.