Statute Details
- Title: Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Notes) (No. 4) Regulations 2004
- Act Code: SFA2001-S78-2004
- Type: Subsidiary Legislation (sl)
- Authorising Act: Securities and Futures Act (SFA) (notably section 337(1))
- Enacting body: Monetary Authority of Singapore (MAS)
- Citation: SL 78/2004
- Commencement: 25 February 2004
- Key provisions: Section 2 (definitions); Section 3 (exemption)
- Regulatory focus: Exemption from market conduct prohibitions for stabilising actions in relation to specified notes
- Specified instrument: Guaranteed fixed rate senior notes due 2014 issued by PGN Euro Finance 2003 Limited (up to US$200 million), guaranteed by PT Perusahaan Gas Negara (Persero) Tbk
What Is This Legislation About?
The Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Notes) (No. 4) Regulations 2004 (“Stabilising Action (Notes) Regulations”) is a targeted regulatory instrument. In essence, it creates a narrow exemption from certain market conduct provisions in the Securities and Futures Act (SFA) for stabilising activities carried out in relation to a specific set of debt securities—namely, guaranteed fixed rate senior notes due 2014 issued by PGN Euro Finance 2003 Limited and guaranteed by PT Perusahaan Gas Negara (Persero) Tbk.
In plain language, the Regulations recognise that, in some capital markets transactions, market participants may undertake “stabilising action” to support or maintain the market price of newly issued notes. Such activity can be commercially necessary to promote orderly trading and reduce volatility immediately after issuance. However, stabilising conduct can also resemble prohibited dealing or market manipulation. The Regulations therefore carve out a controlled exception, allowing stabilising actions to proceed without triggering the relevant SFA prohibitions—provided the conditions are met.
Importantly, the exemption is not general. It is limited to (i) stabilising actions in respect of the defined “Notes”, (ii) carried out by specified persons (as defined in “stabilising action”), (iii) involving specified counterparty categories (persons under section 274 of the SFA or “sophisticated investors” under section 275(2) of the SFA), and (iv) occurring only within a defined time window—30 calendar days from the date of issuance.
What Are the Key Provisions?
Section 1 (Citation and commencement) sets the legal identity and timing of the Regulations. The Regulations may be cited as the “Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Notes) (No. 4) Regulations 2004” and come into operation on 25 February 2004. For practitioners, commencement matters because exemptions and compliance obligations turn on whether conduct occurred after the Regulations took effect.
Section 2 (Definitions) is central because it tightly constrains the exemption. Two defined terms do the work:
- “Notes” are precisely identified: guaranteed fixed rate senior notes due 2014 issued by PGN Euro Finance 2003 Limited for a principal amount of up to US$200 million, guaranteed by PT Perusahaan Gas Negara (Persero) Tbk. This specificity means the exemption cannot be extended to other tranches, other issuers, or different instruments, even if economically similar.
- “stabilising action” is defined as an action taken in Singapore or elsewhere by Credit Suisse First Boston (Europe) 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 matters in two ways: (1) it limits the actor to Credit Suisse First Boston (Europe) Limited and related corporations; and (2) it limits the conduct to buying (including offers or agreements to buy) for stabilisation purposes.
Section 3 (Exemption) provides the operative relief. It states that, subject to paragraph (2), sections 197 and 198 of the SFA shall not apply to any stabilising action carried out in respect of any of the Notes 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.
While the extract does not reproduce sections 197 and 198 of the SFA, the structure indicates that those provisions are the relevant market conduct prohibitions that would otherwise capture stabilising dealing. The exemption therefore operates as a “no application” rule: the prohibited provisions are expressly inapplicable to qualifying stabilising action.
Section 3(2) (Time limit) imposes a critical constraint: the exemption does not apply to stabilising action carried out at any time after the expiry of the period of 30 calendar days from the date of the issuance of the Notes. This is a classic stabilisation framework: stabilisation is permitted only in the immediate post-issuance period when price formation is most vulnerable to disorderly trading.
For legal practice, the time element raises evidentiary and compliance issues. Parties should be able to demonstrate (i) the date of issuance, (ii) the dates and times of stabilising trades or offers/agreements to buy, and (iii) that any stabilisation activity ceased within the 30-day window. Where stabilising activity is implemented through trading desks, algorithms, or pre-arranged dealer arrangements, counsel should ensure the operational process can track and evidence compliance with the cutoff.
How Is This Legislation Structured?
The Regulations are short and structured around a conventional legislative pattern for exemptions:
- Section 1 provides the citation and commencement date.
- Section 2 defines the key terms that delimit the scope of the exemption—particularly the identity of the “Notes” and the definition of “stabilising action”.
- Section 3 contains the exemption itself, including both the qualifying counterparty categories and the temporal limitation.
Notably, the Regulations do not create additional procedural requirements in the extract (such as notice filings or reporting duties). Instead, the legal effect is achieved through the “sections 197 and 198 shall not apply” mechanism, conditioned by the defined scope and the 30-day limit.
Who Does This Legislation Apply To?
The exemption applies to stabilising actions that meet all definitional and conditional requirements. In practice, this means it is relevant to the stabilising dealer and its related corporations—here, Credit Suisse First Boston (Europe) Limited and related corporations—when they undertake stabilisation activities in relation to the defined Notes.
However, the exemption is also conditioned on the counterparty category. Stabilising action must be carried out with either (i) a person referred to in section 274 of the SFA or (ii) a sophisticated investor under section 275(2) of the SFA. Accordingly, even if the stabilising dealer and the Notes are correct, the exemption may fail if trades are executed with counterparties outside those categories.
From a compliance perspective, counsel should treat the exemption as a multi-factor test: actor (defined stabilising dealer), instrument (defined Notes), counterparty (section 274 persons or sophisticated investors), and timing (within 30 calendar days from issuance). Any deviation can cause the exemption to fall away, potentially exposing conduct to the underlying SFA prohibitions.
Why Is This Legislation Important?
This Regulations is important because it demonstrates how Singapore’s market conduct regime balances two competing objectives: (1) preventing market manipulation and improper dealing, and (2) allowing legitimate market stabilisation practices in controlled circumstances. For practitioners advising issuers, dealers, and trading desks, the Regulations provides legal certainty for stabilisation strategies that would otherwise be risky under general market conduct prohibitions.
In practical terms, the exemption enables stabilising activity to occur without the stabilising dealer being automatically in breach of the SFA provisions that would otherwise apply. This can be crucial for transaction execution, particularly in international note issuances where stabilisation is a standard feature of underwriting and distribution mechanics.
At the same time, the narrow tailoring of the exemption means it must be handled carefully. The Regulations is instrument-specific and dealer-specific, and it includes a hard time limit. Lawyers should therefore ensure that transaction documentation, dealer procedures, and trade capture systems align with the legal boundaries. Where stabilisation is planned, counsel should also consider whether other regulatory regimes (for example, prospectus-related disclosure expectations or internal compliance policies) require additional steps beyond the exemption.
Finally, the Regulations’ “no application” drafting technique is a useful drafting model for understanding how Singapore implements exemptions: rather than creating a new offence or safe harbour with broad discretion, it directly removes the applicability of identified statutory provisions to qualifying conduct. This approach simplifies legal analysis but increases the importance of strict compliance with the conditions.
Related Legislation
- Securities and Futures Act (SFA) (Cap. 289) — including sections 197, 198, 274, 275(2), and the regulation-making power in section 337(1)
- Futures Act — referenced in the broader regulatory framework for market conduct (as applicable)
- Stabilising Act — referenced in the legislation timeline metadata (contextual stabilisation framework)
- Timeline / Legislation timeline — for confirming the correct version and amendments status
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. 4) Regulations 2004 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the official text for authoritative provisions.