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
- Type: Subsidiary Legislation (SL)
- Authorising Act: Securities and Futures Act (Cap. 289)
- Enacting power: Section 337(1) of the Securities and Futures Act
- Citation and commencement: Comes into operation on 25 January 2005
- Status: Current version as at 27 March 2026 (per the legislation portal)
- Key provisions: Section 1 (Citation and commencement); Section 2 (Definitions); Section 3 (Exemption)
- Relevant Act provisions referenced: Sections 197, 198, 274, and 275(2) 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. 4) Regulations 2005 (“Stabilising Action (Notes) Regulations”) creates a targeted regulatory exemption from certain market conduct rules under 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—namely, certain 3-year floating rate notes—without being caught by the SFA provisions that would otherwise restrict or regulate such conduct.
The legislation is narrow in scope and time-bound. It does not create a general permission for stabilisation in all securities markets. Instead, it identifies a specific issuance: 3-year floating rate notes due January 2008 issued by National Agricultural Cooperative Federation, up to a principal amount of ¥10,000,000,000. It then defines stabilising action as conduct by a particular financial firm (Daiwa Securities SMBC Hong Kong Limited) and its related corporations to buy, or to offer or agree to buy, those notes in order to stabilise or maintain their market price in Singapore or elsewhere.
Finally, the exemption is limited to stabilising actions taken within a defined window—30 days from the date of issue—and only in relation to dealings with specified categories of counterparties: persons referred to in section 274 of the SFA, or a “sophisticated investor” as defined in section 275(2) of the SFA. The result is a controlled carve-out that balances market integrity concerns with practical realities of securities issuance and price formation.
What Are the Key Provisions?
Section 1 (Citation and commencement) is straightforward. It provides the short title and states that the Regulations come into operation on 25 January 2005. For practitioners, this matters because the exemption only becomes legally effective from that commencement date (although the exemption itself is tied to the issuance date of the notes and the 30-day stabilisation period).
Section 2 (Definitions) sets the boundaries of the exemption by defining two critical terms: “Notes” and “stabilising action”. The definition of “Notes” is highly specific. It refers to “the 3-year floating rate notes due January 2008 issued by National Agricultural Cooperative Federation” with a maximum principal amount of up to ¥10,000,000,000. This specificity is central: stabilising action in respect of other notes, other issuers, or different tenors would not fall within the exemption.
The definition of “stabilising action” is equally targeted. It covers 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 to stabilise or maintain their market price in Singapore or elsewhere. Two practical implications follow. First, the exemption is tied to the identity of the stabilising party; other dealers cannot rely on this exemption unless they act through the defined entity or its related corporations. Second, the conduct is not limited to actual purchases; it includes offers or agreements to buy, which can be relevant for underwriting and distribution mechanics.
Section 3 (Exemption) 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 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.
Although the extract does not reproduce the text of sections 197 and 198, the structure indicates that those sections impose market conduct restrictions that would otherwise apply to stabilising behaviour. The exemption therefore functions as a carve-out: it removes the applicability of those restrictions for the specified stabilising actions, but only when the stabilisation is conducted within the specified time period and with the specified counterparty categories.
For legal practice, the key compliance questions are therefore: (1) Are the securities exactly within the defined “Notes”? (2) Is the stabilising action being taken by Daiwa Securities SMBC Hong Kong Limited or its related corporations? (3) Is the stabilising action taken within 30 days from the date of issue? (4) Are the dealings with counterparties that fall within section 274 persons or sophisticated investors? If any of these elements is missing, the exemption may not apply and the general SFA market conduct rules could be engaged.
How Is This Legislation Structured?
The Regulations are structured as a short instrument with three substantive parts:
Part/Section 1: Citation and commencement (administrative).
Part/Section 2: Definitions (sets the scope through “Notes” and “stabilising action”).
Part/Section 3: Exemption (the legal effect—disapplication of SFA sections 197 and 198 for qualifying stabilising actions).
There are no additional schedules or complex procedural requirements in the extract provided. The legislative design is therefore “definition-led”: once the defined terms are satisfied, the exemption automatically operates within the specified conditions.
Who Does This Legislation Apply To?
The exemption is relevant primarily to market participants involved in the issuance and trading of the defined notes—especially the stabilising dealer and its related corporations. In practical terms, it benefits Daiwa Securities SMBC Hong Kong Limited (and related corporations) when they undertake stabilising action as defined. It also affects counterparties on the other side of those dealings, because the exemption is conditional on the counterparty being within the categories specified by reference to the SFA.
Counterparties must fall within either (a) the category of persons referred to in section 274 of the SFA, or (b) the category of sophisticated investors under section 275(2). This means that the exemption is not intended for retail-facing conduct; it is designed for transactions with more informed or institutionally appropriate counterparties. Practitioners should therefore confirm counterparty classification and documentation (e.g., evidence supporting “sophisticated investor” status) when relying on the exemption.
Why Is This Legislation Important?
This Regulations is important because it illustrates how Singapore’s market conduct framework accommodates stabilisation activity while maintaining regulatory control. Stabilisation—particularly in the immediate aftermath of issuance—can be commercially necessary to support orderly trading and reduce volatility. However, stabilisation can also raise concerns about market manipulation or unfair price support. The exemption approach reflects a compromise: stabilisation is permitted, but only within tightly defined boundaries.
From an enforcement and compliance perspective, the exemption is significant because it disapplies specific SFA provisions (sections 197 and 198) for qualifying conduct. That disapplication can materially change the legal risk profile for the stabilising dealer. Without the exemption, stabilising purchases or related arrangements could be treated as prohibited or restricted market conduct. With the exemption, the dealer can proceed—provided all conditions are met—without breaching those particular SFA sections.
For practitioners advising on a note issuance, the Regulations also serve as a precedent for how Singapore structures targeted exemptions: define the instrument precisely, define the stabilising actor, limit the time window, and restrict counterparties by reference to established SFA categories. This is a useful drafting and risk-assessment model when evaluating whether other stabilisation activities might require separate exemptions or regulatory approvals.
Related Legislation
- Securities and Futures Act (Cap. 289) — particularly sections 197, 198, 274, and 275(2)
- Futures Act (as referenced in the legislation metadata)
- Stabilising Act (as referenced in the legislation metadata)
- Timeline (legislation portal timeline for version control)
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.