Statute Details
- Title: Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Notes) (No. 36) Regulations 2004
- Act Code: SFA2001-S511-2004
- Type: Subsidiary Legislation (sl)
- Authorising Act: Securities and Futures Act (SFA), in particular section 337(1)
- Enacting authority: Monetary Authority of Singapore (MAS)
- Citation: Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Notes) (No. 36) Regulations 2004
- Commencement: 27 August 2004
- Status: Current version as at 27 March 2026
- Key provisions: Section 1 (citation and commencement); Section 2 (definitions); Section 3 (exemption)
- Legislative effect (headline): Exempts specified “stabilising action” in relation to specified notes from the prohibitions in sections 197 and 198 of the Securities and Futures Act
What Is This Legislation About?
The Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Notes) (No. 36) Regulations 2004 (“Stabilising Action Exemption Regulations”) is a targeted regulatory instrument. In plain terms, it creates a narrow exemption from certain market conduct rules in the Securities and Futures Act (the “SFA”) for a particular kind of trading activity—namely, stabilising purchases—undertaken in connection with a specific issuance of notes.
Stabilisation is a common feature of securities issuance. When new debt securities are launched, market prices can fluctuate sharply due to initial supply and demand. Under controlled circumstances, an issuer’s arranger or a related financial institution may buy (or offer to buy) the securities to help stabilise the market price. However, stabilisation can resemble prohibited conduct if it is not clearly authorised and bounded. These Regulations therefore carve out a lawful pathway for stabilising action, but only for a defined set of notes, a defined stabiliser, and a defined time window.
Although the Regulations are short, they are legally significant because they modify the operation of the SFA’s market conduct prohibitions. They do not repeal the general rules; instead, they provide a statutory exemption that practitioners must understand when advising on compliance for note issuance and related trading activity.
What Are the Key Provisions?
Section 1: Citation and commencement. This section provides the formal name of the Regulations and states that they come into operation on 27 August 2004. For practitioners, the commencement date matters because stabilising action must fall within the legal framework applicable at the time the trading occurs.
Section 2: Definitions. The Regulations define two core concepts: “Notes” and “stabilising action”. The definition of “Notes” is highly specific. It refers to the 5-year US$ fixed rate guaranteed notes due September 2009 issued by ICBCA (C.I.) Limited for a principal amount of up to US$800 million, and guaranteed by Industrial and Commercial Bank of China (Asia) Limited. This means the exemption is not generic; it is tied to a particular instrument and issuer/guarantor structure.
The definition of “stabilising action” is also tightly bounded. It means an action taken in Singapore or elsewhere by The Hongkong and Shanghai Banking Corporation 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. Practically, this definition signals that the exemption is intended for the stabilising entity (HSBC and its related corporations) and for stabilisation-related trading intentions.
Section 3: Exemption from sections 197 and 198 of the SFA. This 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 respect to stabilising action taken by 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 effect, the exemption is conditional on both time and who is doing the stabilising. The 30-day limit is a critical compliance boundary: stabilising action outside that window would not benefit from the exemption and could expose the stabiliser to the prohibitions in sections 197 and 198.
For practitioners, the reference to sections 274 and 275(2) is a reminder that the exemption is not simply “HSBC can stabilise.” Rather, the Regulations link the exemption to the SFA’s categorisation of eligible participants. A lawyer advising an arranger, dealer, or trading desk must therefore cross-check the stabilising counterparty against the SFA’s definitions and eligibility requirements.
Although the extract does not reproduce the text of sections 197 and 198, the structure indicates that those sections contain market conduct restrictions relevant to dealings in securities (commonly including prohibitions on manipulative or improper trading). The Regulations’ drafting approach—“shall not apply”—is a classic exemption technique: it suspends the operation of those prohibitions for the specified stabilising activity, thereby reducing legal risk for authorised stabilisation.
How Is This Legislation Structured?
The Regulations are extremely concise and consist of:
- Section 1 (Citation and commencement): sets the legal identity and start date.
- Section 2 (Definitions): defines “Notes” and “stabilising action” with instrument-specific and actor-specific precision.
- Section 3 (Exemption): provides the exemption from the SFA’s market conduct provisions, subject to a 30-day period and eligibility criteria tied to section 274 persons or sophisticated investors under section 275(2).
There are no additional parts or schedules in the extract. The legal “work” is done through the definitions and the exemption clause, which together create a narrow compliance perimeter.
Who Does This Legislation Apply To?
These Regulations apply to parties involved in stabilising dealings in the defined Notes. In practice, the likely affected parties include the stabilising institution (HSBC and its related corporations) and any other persons who may be involved in the stabilising activity and who must fall within the exemption’s eligibility conditions.
The exemption is available only for stabilising action taken within 30 days from the date of issue and only where the stabilising action is taken by a person falling within section 274 of the SFA or by a sophisticated investor as defined in section 275(2). This means that even if an entity is capable of stabilising, it must still satisfy the SFA-linked eligibility criteria to benefit from the exemption.
Because the definition of “stabilising action” is actor-specific (HSBC or its related corporations) and instrument-specific (the particular ICBCA notes guaranteed by ICBC Asia), the Regulations do not generally apply to stabilisation of other securities or by other dealers. Practitioners should therefore treat this as a deal-specific exemption rather than a broad market practice authorisation.
Why Is This Legislation Important?
For market participants, the key importance of these Regulations is legal certainty. Stabilisation trading can be commercially desirable, but it can also trigger regulatory scrutiny if it appears to be manipulative. By expressly exempting stabilising action from the prohibitions in sections 197 and 198 of the SFA, the Regulations provide a controlled legal basis for stabilisation in a defined context.
From an enforcement and compliance perspective, the Regulations also illustrate how MAS approaches exemptions: they are typically narrow, time-bound, and tied to specific instruments and eligible participants. The 30-day limit is particularly important. It requires trading desks and compliance teams to implement operational controls—such as monitoring the issue date, tracking stabilisation orders, and ensuring that any stabilising activity ceases within the permitted period.
For lawyers, the Regulations are useful because they demonstrate how to interpret exemption instruments in Singapore’s market conduct framework. The exemption clause does not stand alone; it cross-references the SFA’s internal definitions and categories (sections 274 and 275(2)). Advisers should therefore read the Regulations together with the SFA provisions they reference, and confirm that the stabiliser’s status and the transaction details align with the exemption’s conditions.
Finally, the Regulations are relevant in transaction documentation and regulatory filings. When advising on note issuance, stabilisation arrangements, underwriting syndicates, and dealer conduct, counsel should ensure that the stabilisation strategy is structured to fit within the exemption’s definitions—particularly the identity of the stabilising entity and the precise instrument description.
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 platform metadata)
- Stabilising Act (as referenced in the platform metadata)
- 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. 36) Regulations 2004 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the official text for authoritative provisions.