Statute Details
- Title: Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Notes) (No. 35) Regulations 2004
- Act Code: SFA2001-S482-2004
- Type: Subsidiary Legislation (SL)
- Authorising Act: Securities and Futures Act (Cap. 289) — powers under section 337(1)
- Enacting authority: Monetary Authority of Singapore (MAS)
- Citation: SFA2001-S482-2004 (SL No. 482/2004)
- Commencement: 11 August 2004
- Key provisions: Section 2 (definitions); Section 3 (exemption)
- Notes covered: 7-year and 9-month 9.75% senior notes due April 2012 issued by Globe Telecom, Inc. in July 2004 (up to US$100 million)
- Stabilising party: UBS Limited (and related corporations)
- Exemption window: within 30 days from the date of issue of the Notes
- Exemption beneficiaries: persons under section 274 of the SFA or “sophisticated investors” under section 275(2) of the SFA
- Amendment noted in extract: Definition of “Notes” amended by S 553/2004 with effect from 1 September 2004
What Is This Legislation About?
The Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Notes) (No. 35) Regulations 2004 is a targeted regulatory instrument that creates a narrow exemption from certain market conduct rules in the Securities and Futures Act (SFA). In essence, it allows stabilising activity—typically undertaken by an arranger or dealer during a new issuance—to occur without triggering prohibitions that would otherwise apply to dealings in securities.
Stabilising action is a common feature of securities markets. When a new bond or note is issued, there may be concern about short-term price volatility. Under stabilisation practices, a financial institution may buy (or offer to buy) the relevant securities in order to support or maintain their market price. This can help improve liquidity and reduce disorderly trading immediately after issuance.
This set of Regulations is not a general stabilisation regime. Instead, it is an exemption tailored to a specific issuance: the Globe Telecom, Inc. 7-year and 9-month 9.75% senior notes due April 2012, issued in July 2004 (up to US$100 million). The exemption is also limited to stabilising action taken by a specific stabilising participant—UBS Limited (and its related corporations)—and only for a defined period after issuance.
What Are the Key Provisions?
1. Citation and commencement (Regulation 1)
Regulation 1 provides the short title and 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. 35) Regulations 2004” and come into operation on 11 August 2004. For practitioners, this matters because the exemption only becomes legally available from the commencement date (subject to any transitional or interpretive considerations not shown in the extract).
2. Definitions (Regulation 2)
Regulation 2 defines two central concepts: “Notes” and “stabilising action.” These definitions are crucial because the exemption in Regulation 3 applies only if the activity falls within these defined terms.
“Notes” are defined as the “7-year and 9-month 9.75% senior notes due April 2012 issued by Globe Telecom, Inc. in July 2004, for a principal amount of up to US$100 million.” The extract also indicates that this definition was amended by S 553/2004 effective 1 September 2004. Practically, amendments to the definition can affect whether particular tranches, amounts, or instruments are covered. A lawyer should therefore verify the exact scope of the Notes as at the relevant dealing dates, particularly where stabilisation may have occurred around the amendment effective date.
“Stabilising action” is defined as an action taken in Singapore or elsewhere by UBS 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 broad enough to cover not only actual purchases but also offers or agreements to buy. It also confirms the geographical scope: stabilising action may occur in Singapore or elsewhere, but the purpose is to stabilise or maintain market price in Singapore or elsewhere.
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 Act shall not apply to stabilising action taken in respect of the Notes, within 30 days from the date of issue, with stabilising action undertaken by or 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.
Although the extract does not reproduce the text of sections 197 and 198 of the SFA, the structure indicates that those sections impose market conduct restrictions that would otherwise capture stabilising dealings. The Regulations carve out stabilising action from those restrictions, but only if the stabilising activity is carried out within the specified time limit and involves the specified categories of counterparties/participants.
Practical implications of the exemption
For market participants, the exemption is valuable because it reduces legal uncertainty around stabilisation practices. However, it is also tightly bounded. The exemption is limited to:
- the specific Notes (as defined);
- stabilising action by UBS Limited or its related corporations (as defined);
- a strict 30-day period from the date of issue; and
- dealings involving specified persons (section 274 persons) or sophisticated investors (section 275(2)).
Accordingly, a practitioner should treat this as a compliance “checklist” instrument: confirm the instrument, confirm the stabiliser, confirm the timing, and confirm the counterparty category. If any element falls outside the defined scope, the exemption may not apply and the underlying prohibitions in the SFA could be engaged.
How Is This Legislation Structured?
These Regulations are short and structured around three provisions:
- Regulation 1 (Citation and commencement): establishes the short title and the date the Regulations come into force.
- Regulation 2 (Definitions): defines the key terms “Notes” and “stabilising action,” which determine the scope of the exemption.
- Regulation 3 (Exemption): provides the legal relief by disapplying sections 197 and 198 of the SFA to qualifying stabilising action, subject to timing and participant conditions.
There are no additional parts or schedules in the extract, reflecting the Regulations’ purpose as a targeted exemption rather than a comprehensive regulatory framework.
Who Does This Legislation Apply To?
The Regulations apply to stabilising action in respect of the defined Notes, where the stabilising action is taken by UBS Limited or its related corporations. In practical terms, this would typically involve the underwriting syndicate, dealer managers, or other entities within the stabiliser’s corporate group that are authorised and operationally involved in stabilisation activities.
The exemption is also conditional on the stabilising action being 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 the exemption is not purely about the stabiliser’s conduct; it also depends on the category of the counterparty/participant in the stabilising dealings. Lawyers should therefore map the actual dealing counterparties against the SFA definitions to confirm that the exemption conditions are satisfied.
Why Is This Legislation Important?
From a market integrity perspective, stabilisation can be controversial because it involves trading activity that may influence price formation. The SFA’s market conduct provisions (including the referenced sections 197 and 198) are designed to prevent manipulative or misleading trading practices. This Regulations instrument balances that integrity objective with the practical realities of primary issuance by allowing stabilisation in a controlled and time-limited manner.
For practitioners, the importance lies in how the exemption is drafted: it is instrument-specific, party-specific, and time-specific. That drafting style is common for exemptions in Singapore’s securities regulatory framework, particularly where regulators want to permit a particular market practice for a particular transaction without creating a broad precedent. As a result, compliance teams should not assume that stabilisation is automatically exempt in other bond issues or for other dealers.
In enforcement and risk management terms, the Regulations reduce the likelihood that stabilisation trades will be treated as breaches of the disapplied provisions, provided the exemption conditions are met. However, the narrow scope increases the need for careful documentation: dealing records should show that stabilisation occurred within the 30-day window, that the relevant Notes are within the defined description (including any amendments), and that counterparties fall within the relevant SFA categories.
Related Legislation
- Securities and Futures Act (Cap. 289) — particularly sections 197, 198, 274, 275(2), and the regulation-making power in section 337(1)
- Futures Act (listed in the provided metadata as related legislation)
- Stabilising Act (listed in the provided metadata as related legislation)
- 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. 35) Regulations 2004 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the official text for authoritative provisions.