Statute Details
- Title: Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Notes) (No. 4) Regulations 2005
- Act Code: SFA2001-S47-2005
- Legislative Type: Subsidiary Legislation (SL)
- Authorising Act: Securities and Futures Act (SFA) (notably section 337(1))
- Citation: SL 47/2005
- Commencement: 25 January 2005
- Status: Current version as at 27 March 2026 (per the provided extract)
- Key Provisions: Section 1 (citation and commencement), Section 2 (definitions), Section 3 (exemption)
- Relevant SFA Provisions Referenced: Sections 197, 198, 274, 275(2), and the stabilising framework under the SFA
What Is This Legislation About?
The Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Notes) (No. 4) Regulations 2005 (“Stabilising Action (Notes) (No. 4) Regulations”) creates a targeted regulatory exemption from certain market conduct restrictions in the Securities and Futures Act (SFA). In plain terms, it allows specified parties to take “stabilising action” in relation to a particular class of debt securities—“Notes”—without the usual prohibitions applying, provided strict conditions are met.
Stabilising action is a practice commonly used in securities offerings to help manage short-term price volatility after issuance. The law recognises that stabilisation, when properly conducted, may support orderly trading and reduce disruptive market swings. However, because stabilisation can also be abused to mislead investors or artificially influence prices, the SFA generally restricts such conduct. These Regulations carve out a narrow exception for stabilisation in respect of a specific issuance of notes.
Importantly, the exemption is not general. It is limited by (i) the identity of the notes, (ii) the identity of the stabilising actor, and (iii) the timeframe and investor categories involved. This “bespoke” nature is typical of stabilisation exemptions: they are designed to facilitate a particular transaction while preserving the integrity of Singapore’s market conduct regime.
What Are the Key Provisions?
Section 1 (Citation and commencement). This provision confirms the legal name of the Regulations and states that they come into operation on 25 January 2005. For practitioners, this matters when assessing whether stabilising activity occurred within the period covered by the exemption.
Section 2 (Definitions). The Regulations define two critical terms: “Notes” and “stabilising action”. The definition of “Notes” is highly specific: it refers to 3-year floating rate notes due January 2008 issued by National Agricultural Cooperative Federation with a principal amount of up to ¥10,000,000,000. This means the exemption is tied to a particular issuance, not to all notes or all floating rate notes.
The definition of “stabilising action” is equally specific. It means an action taken in Singapore or elsewhere by Daiwa Securities SMBC Hong Kong 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. Two practical points follow from this definition:
- Actor limitation: only Daiwa Securities SMBC Hong Kong Limited and its related corporations are within the definition.
- Purpose limitation: the buying (or offers/agreements to buy) must be for the purpose of stabilising or maintaining market price.
Section 3 (Exemption). This is the operative provision. It states that Sections 197 and 198 of the SFA shall not apply to stabilising action taken in respect of any of the Notes, within 30 days from the date of issue, with respect to stabilising action 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.
While the extract does not reproduce Sections 197 and 198 themselves, the structure indicates that those sections impose prohibitions or restrictions on certain market conduct activities. The Regulations effectively suspend those prohibitions for the narrow stabilisation conduct described in Section 2, but only if the stabilisation occurs within the 30-day post-issuance window and only when the counterparty is within the permitted categories (section 274 persons or sophisticated investors).
Practitioner takeaway: the exemption is conditional. A stabilising purchase outside the 30-day window, or a stabilising purchase involving a counterparty outside the permitted categories, would likely fall outside the exemption and therefore remain subject to the SFA prohibitions in Sections 197 and 198.
How Is This Legislation Structured?
The Regulations are short and structured as a standard subsidiary legislative instrument:
- Section 1 sets out the citation and commencement.
- Section 2 provides definitions that narrow the scope of the exemption to a specific issuance and a specific stabilising actor and purpose.
- Section 3 contains the exemption from specified SFA market conduct provisions, subject to time and counterparty conditions.
From a legal drafting perspective, the Regulations use definitional precision to limit the exemption’s reach. This reduces interpretive uncertainty and helps regulators and market participants determine quickly whether stabilising activity is covered.
Who Does This Legislation Apply To?
In practical terms, the Regulations apply to parties engaged in stabilising action in relation to the defined Notes. Because “stabilising action” is defined by reference to the actor—Daiwa Securities SMBC Hong Kong Limited and its related corporations—the exemption is primarily relevant to that group and any entities acting through them.
However, the exemption’s conditions also depend on the counterparty category for the stabilising transactions. Section 3 permits stabilising action only when the stabilising action is taken with a person referred to in section 274 of the SFA or with a sophisticated investor under section 275(2). Therefore, while the exemption is triggered by the stabiliser’s conduct, it is constrained by who the stabiliser is dealing with.
Why Is This Legislation Important?
This legislation is important because it illustrates how Singapore balances two competing objectives: (i) allowing legitimate market practices that support orderly trading after issuance, and (ii) preventing manipulative or misleading conduct that undermines market integrity. By exempting stabilising action from certain SFA prohibitions, the Regulations enable a controlled stabilisation process for a specific note issuance.
For practitioners advising issuers, lead managers, stabilising agents, or trading desks, the Regulations provide a clear compliance framework. The key compliance questions are straightforward but must be answered carefully:
- Are the securities the “Notes” as defined? (specific issuer, maturity, coupon structure, and principal amount)
- Is the stabilising actor within the defined stabiliser? (Daiwa Securities SMBC Hong Kong Limited or related corporations)
- Is the activity within the 30-day period from the date of issue?
- Are the counterparties within the permitted categories? (section 274 persons or sophisticated investors)
- Is the purpose genuinely stabilisation/price maintenance?
From an enforcement perspective, the narrowness of the exemption means that regulators can more easily identify when conduct is outside the safe harbour. If stabilising activity is conducted beyond the permitted timeframe, with impermissible counterparties, or in relation to securities outside the definition, the exemption would not apply and the stabiliser could face liability under the SFA provisions that remain in force.
Finally, the Regulations’ transaction-specific drafting underscores a practical reality: stabilisation exemptions are not “blanket permissions”. They are typically granted to facilitate particular offerings under conditions that preserve investor protection and market fairness.
Related Legislation
- Securities and Futures Act (SFA) (Cap. 289) — including the market conduct provisions referenced in these Regulations (Sections 197, 198, 274, 275(2)) and the regulation-making power in Section 337(1).
- Futures Act — referenced in the provided metadata as part of the broader regulatory ecosystem.
- Stabilising Act — referenced in the provided metadata (contextual to stabilisation concepts and market conduct regulation).
- Timeline / Legislation timeline — for confirming the correct version as at the relevant date (noting the “current version as at 27 Mar 2026” status 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 2005 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the official text for authoritative provisions.