Statute Details
- Title: Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Notes) (No. 33) Regulations 2004
- Act Code: SFA2001-S472-2004
- Legislation Type: Subsidiary legislation (SL)
- Authorising Act: Securities and Futures Act (SFA) (notably section 337(1))
- Legislative Instrument Number: SL 472/2004
- Citation: Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Notes) (No. 33) Regulations 2004
- Commencement: 5 August 2004
- Enacting Authority: Monetary Authority of Singapore (MAS)
- Key Provisions: Section 2 (definitions); Section 3 (exemption from sections 197 and 198 of the SFA)
- Defined Instruments: “Notes” (10-year US$ fixed rate notes due July 2014 issued by PTT Public Company Limited)
- Defined Conduct: “Stabilising action” (specified stabilisation dealing by Deutsche Bank Securities Inc. and related corporations)
What Is This Legislation About?
The Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Notes) (No. 33) Regulations 2004 is a targeted regulatory instrument. In plain terms, it creates a limited exemption from certain market conduct rules in the Securities and Futures Act (SFA) for a specific type of trading activity—namely, “stabilising action”—conducted in relation to a particular bond issuance.
Stabilisation is a common market practice in securities offerings. When a new issue begins trading, the issuer or its arranging banks may take steps to support or “stabilise” the market price to reduce volatility. However, stabilisation can overlap with prohibitions against market manipulation or improper dealing. This Regulations addresses that tension by carving out an exemption, but only for a defined set of circumstances.
Crucially, the exemption is narrow. It applies only to stabilising action taken within 30 days from the date of issue of the Notes, and only when the stabilising dealings are carried out with specified categories of counterparties—either persons referenced in section 274 of the SFA or sophisticated investors as defined in section 275(2) of the SFA. It also applies only to stabilising action performed by a specified stabilising entity: Deutsche Bank Securities Inc. (and its related corporations).
What Are the Key Provisions?
Section 1 (Citation and commencement) provides the formal name of the Regulations and sets the commencement date. The Regulations may be cited as the “Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Notes) (No. 33) Regulations 2004” and came into operation on 5 August 2004. For practitioners, commencement matters because the exemption can only be relied upon for stabilising action occurring after the Regulations take effect (subject to the specific time window in section 3).
Section 2 (Definitions) is the heart of the instrument’s scope. It defines two key terms:
- “Notes” are defined with precision: 10-year US$ fixed rate notes due July 2014 issued by PTT Public Company Limited for a principal amount of up to US$400 million. This means the exemption is not a general stabilisation regime for any bond; it is tied to a particular issuance.
- “Stabilising action” is defined as an action taken in Singapore or elsewhere by Deutsche Bank Securities 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.
From a legal risk perspective, the definition is both enabling and restrictive. It permits stabilisation dealing only when it is (i) carried out by the specified entity group, (ii) directed at the defined Notes, and (iii) aimed at stabilising or maintaining market price. Any stabilisation activity outside these parameters would not fall within the exemption and could expose the dealing party to the underlying prohibitions.
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, provided 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, section 3 creates a time-limited and counterparty-limited safe harbour. Even if a party is otherwise capable of stabilising (e.g., it is within the defined stabiliser group), the exemption only applies if the stabilising dealings occur within the specified 30-day period and are conducted with the permitted categories of counterparties.
For practitioners, the key compliance tasks flowing from section 3 are straightforward but must be executed carefully:
- Confirm the instrument: ensure the Notes match the defined description (issuer, maturity, currency, and principal amount parameters).
- Confirm the stabiliser: ensure the dealing is performed by Deutsche Bank Securities Inc. or a related corporation within the definition.
- Confirm the purpose and nature of dealing: the dealing must be to stabilise or maintain market price, and must take the form of buying (or offering/agreement to buy) the Notes.
- Confirm the timing: stabilising action must be within 30 days from the date of issue.
- Confirm the counterparty category: counterparties must fall within section 274 persons or be sophisticated investors under section 275(2).
How Is This Legislation Structured?
This Regulations is concise and structured around three provisions:
- Section 1 sets out the citation and commencement.
- Section 2 provides definitions for “Notes” and “stabilising action”, which effectively determine the scope of the exemption.
- Section 3 contains the exemption from the application of specific SFA provisions (sections 197 and 198), subject to the time window and permitted counterparties.
There are no additional parts or complex schedules in the extract provided. The legislative design is therefore “scope by definition” (section 2) and “relief by exemption clause” (section 3).
Who Does This Legislation Apply To?
The exemption is directed at the parties conducting stabilising action in relation to the defined Notes. While the Regulations does not expressly list “regulated persons” in the way some market conduct rules do, its definitions and exemption clause make the practical addressees clear: the exemption is for stabilising dealings undertaken by Deutsche Bank Securities Inc. or its related corporations, in respect of the specified PTT Public Company Limited Notes.
Additionally, the exemption is conditional on the counterparty. Stabilising action must be taken with either (i) a person referred to in section 274 of the SFA or (ii) a sophisticated investor under section 275(2). This means that even if the stabiliser and the Notes are correct, dealings with other categories of investors would not benefit from the exemption.
Why Is This Legislation Important?
This Regulations is important because it demonstrates how Singapore’s market conduct framework balances two competing objectives: (1) preventing improper trading and market manipulation, and (2) allowing legitimate market practices such as stabilisation in connection with securities offerings. By exempting stabilising action from the application of sections 197 and 198 of the SFA, MAS provides legal certainty for stabilisation activity that would otherwise risk breaching prohibitions.
For practitioners, the value lies in the precision of the safe harbour. The exemption is not a blanket permission for any stabilisation. It is tailored to a specific issuance and a specific stabiliser group, and it is further constrained by time (30 days from issue) and counterparty type (section 274 persons or sophisticated investors). This structure reduces regulatory ambiguity and helps market participants document their compliance position.
From an enforcement and litigation perspective, the narrowness also means that reliance on the exemption must be evidence-based. If a party cannot show that the stabilising action occurred within the 30-day window, or that counterparties were within the permitted categories, the exemption would likely be unavailable. In that event, the underlying prohibitions in sections 197 and 198 of the SFA could apply, potentially leading to regulatory action or other consequences.
Related Legislation
- Securities and Futures Act (SFA) (Cap. 289) — particularly sections 197, 198, 274, 275(2), and the regulation-making power in section 337(1)
- Stabilising Act (as referenced in the metadata)
- Futures Act (as referenced in the metadata)
- Legislation Timeline (for version verification)
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. 33) Regulations 2004 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the official text for authoritative provisions.