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 (Cap. 289), specifically section 337(1)
- Commencement: 25 February 2004
- Regulation Number: SL 78/2004
- Status: Current version as at 27 March 2026 (per the legislation portal)
- Key Provisions:
- Regulation 1: Citation and commencement
- Regulation 2: Definitions (“Notes”, “stabilising action”)
- Regulation 3: Exemption from sections 197 and 198 of the Securities and Futures Act, subject to conditions
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) (No. 4) Regulations”) creates a targeted regulatory carve-out within Singapore’s market conduct framework. In essence, it permits certain “stabilising actions” in relation to a specific issuance of notes, even though the general law would otherwise restrict or prohibit those activities.
Market conduct rules in the Securities and Futures Act (the “SFA”) are designed to protect market integrity by preventing manipulative or misleading trading practices. Stabilisation is a recognised market practice in some jurisdictions—typically used around the time of issuance to support orderly trading and reduce volatility. However, stabilisation can also resemble conduct that regulators treat as potentially improper. This subsidiary legislation therefore balances these competing concerns by granting an exemption, but only for a defined set of notes, actors, and time limits.
Practically, the Regulations are narrow and issuance-specific. They do not create a general stabilisation regime for all securities. Instead, they define “Notes” as a particular guaranteed fixed rate senior notes due 2014 issued by PGN Euro Finance 2003 Limited (up to US$200 million) and guaranteed by PT Perusahaan Gas Negara (Persero) Tbk. The exemption is then tied to stabilising actions undertaken by Credit Suisse First Boston (Europe) Limited (and related corporations) to buy—or offer or agree to buy—the Notes in order to stabilise or maintain their market price.
What Are the Key Provisions?
1. Citation and commencement (Regulation 1)
Regulation 1 provides the legal citation and states that the Regulations come into operation on 25 February 2004. For practitioners, this matters when assessing whether stabilising conduct occurred within the legal window of the exemption.
2. Definitions: the scope is anchored to specific Notes and a specific stabiliser (Regulation 2)
Regulation 2 is crucial because it defines both the subject matter and the permitted conduct. “Notes” are defined as the 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 definition is highly specific; it effectively means the exemption is not available for other note issuances, other maturities, or other issuers.
“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. The stabilising action must involve buying, or offering or agreeing to buy, the Notes with the purpose of stabilising or maintaining the market price of the Notes in Singapore or elsewhere. Two practical implications follow:
- Actor limitation: only the named stabiliser (and its related corporations) can benefit from the exemption.
- Purpose limitation: the action must be for stabilisation/price maintenance, not for other trading objectives.
3. The exemption from SFA sections 197 and 198 (Regulation 3(1))
Regulation 3(1) is the operative provision. 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 the defined Notes with respect to dealings involving either:
- a person referred to in section 274 of the Act; or
- a sophisticated investor as defined in section 275(2) of the Act.
While the extract provided does not reproduce sections 197, 198, 274, or 275, the structure indicates that the SFA’s market conduct prohibitions (in sections 197 and 198) are being carved out for stabilising actions when the counterparty falls within particular categories—namely, certain persons under section 274 and sophisticated investors under section 275(2).
For legal practice, this means that the exemption is not simply “any stabilisation is allowed.” Instead, the exemption is conditional on the stabilising action being carried out with counterparties that meet the SFA’s specified investor/person categories. Counsel should therefore verify the identity and regulatory classification of the relevant counterparty (e.g., whether it qualifies as a sophisticated investor) and ensure documentation supports that classification.
4. Time limit: stabilisation must occur within 30 calendar days of issuance (Regulation 3(2))
Regulation 3(2) imposes a hard stop. The exemption in paragraph (1) does not apply to any 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 time limitation is often the most operationally significant condition. It requires careful tracking of:
- the “date of issuance” (which may be the pricing date, issue date, or another date depending on the transaction documentation and regulatory interpretation); and
- the trade dates of stabilising purchases or offers/agreements to buy.
From a compliance perspective, firms typically implement internal controls to ensure stabilisation activity ceases by the deadline and that any related communications or conditional orders are assessed for timing and effect.
How Is This Legislation Structured?
The Regulations are structured as a short instrument with three substantive provisions:
- Regulation 1 (Citation and commencement): identifies the instrument and its effective date.
- Regulation 2 (Definitions): defines “Notes” and “stabilising action” to precisely delimit the exemption’s subject matter and permitted conduct.
- Regulation 3 (Exemption): provides the exemption from SFA sections 197 and 198, subject to (i) counterparty categories and (ii) a 30-day post-issuance time limit.
Notably, the Regulations do not include additional procedural requirements in the extract (such as reporting, record-keeping, or disclosure obligations). However, practitioners should not assume that no compliance steps are required under the broader SFA framework or under any related market conduct guidance or prospectus/transaction documentation.
Who Does This Legislation Apply To?
The Regulations apply to stabilising actions in respect of the defined Notes, but only when those actions are taken by Credit Suisse First Boston (Europe) Limited or its related corporations. Therefore, the primary regulated party is the stabilising entity (and its corporate group), rather than the issuer or the guarantor.
In addition, the exemption is limited by the counterparty categories in Regulation 3(1): stabilising actions must be carried out with a person referred to in section 274 of the SFA or with a sophisticated investor under section 275(2). This means that even if the stabiliser and the Notes are correct, the exemption may not apply if the stabilising trades involve counterparties outside those categories.
Why Is This Legislation Important?
This subsidiary legislation is important because it demonstrates how Singapore’s market conduct regime accommodates stabilisation while maintaining regulatory control. Without an exemption, stabilising activity could fall within the prohibitions in the SFA’s market conduct provisions (sections 197 and 198). The Regulations therefore provide legal certainty for a specific transaction: they allow stabilisation to occur without triggering the general prohibitions, provided strict conditions are met.
For practitioners advising on capital markets transactions, the Regulations highlight several key compliance themes:
- Narrow tailoring: the exemption is issuance-specific and actor-specific. Counsel must confirm that the transaction matches the defined “Notes” and that the stabiliser is within the defined group.
- Counterparty classification: stabilisation must be conducted with counterparties that qualify under the SFA’s investor/person categories. This requires diligence on investor status and documentation.
- Time-bound conduct: stabilisation is permitted only within 30 calendar days from issuance. Trading desks and compliance teams must implement controls to prevent late stabilising trades or related arrangements that could be construed as stabilisation after the deadline.
Finally, the Regulations are a reminder that exemptions in market conduct law are typically conditional and interpretive. Even where an exemption exists, firms should maintain robust evidence that the stabilising activity was genuinely undertaken for stabilisation/price maintenance and that all conditions—especially time and counterparty—were satisfied.
Related Legislation
- Securities and Futures Act (Cap. 289): In particular, sections 197, 198, 274, 275(2), and the exemption-making power in section 337(1).
- Futures Act: Mentioned in the legislation metadata as part of the broader regulatory landscape (though not directly addressed in the provided extract).
- Stabilising Act: Referenced in metadata as part of the stabilisation-related regulatory context (not reproduced in the extract).
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.