Statute Details
- Title: Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Notes) (No. 41) Regulations 2004
- Act Code: SFA2001-S670-2004
- Type: Subsidiary Legislation (SL)
- Authorising Act: Securities and Futures Act (SFA) (Cap. 289)
- Authorising Provision: Section 337(1) of the Securities and Futures Act
- Commencement: 1 November 2004
- Legislative Status: Current version as at 27 March 2026
- Regulation Structure: 3 regulations (including definitions and the exemption)
- Key Provisions: Regulation 1 (Citation and commencement); Regulation 2 (Definitions); Regulation 3 (Exemption)
- Instrument Identifier: SL 670/2004
What Is This Legislation About?
The Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Notes) (No. 41) Regulations 2004 is a targeted regulatory instrument that creates a limited exemption from certain market conduct rules in the Securities and Futures Act. In essence, it allows specified “stabilising action” to be taken in relation to particular debt securities (notes) without triggering the prohibitions contained in the referenced provisions of the Act.
In plain language, the Regulations recognise that, during the initial period after a bond or note issuance, market makers or arrangers may undertake stabilisation activities to help maintain orderly trading and reduce extreme price volatility. However, stabilisation can resemble prohibited market manipulation if not carefully constrained. This Regulations therefore permits stabilising conduct only for a defined set of notes, only by specified persons, and only within a strict time window.
Although the Regulations are short, they are practically significant for issuers, underwriters, and trading desks involved in note issuance. They provide legal certainty that stabilisation activities—when conducted within the defined parameters—will not be treated as breaches of the Act’s market conduct restrictions.
What Are the Key Provisions?
Regulation 1: Citation and commencement. This regulation confirms the formal title of the instrument and states that it comes into operation on 1 November 2004. For practitioners, commencement is critical because stabilisation activities must be assessed against the law in force at the time the conduct occurred.
Regulation 2: Definitions. The Regulations define three core concepts that determine the scope of the exemption:
- Upper Tier II Notes: the “10-year upper tier II notes due November 2014” issued by Chohung Bank for a principal amount of up to US$200 million.
- Lower Tier II Notes: the “10-year lower tier II notes due November 2014” issued by Chohung Bank for a principal amount of up to US$200 million.
- Stabilising action: an action taken in Singapore or elsewhere by UBS Limited (or any of its related corporations) to buy, or to offer or agree to buy, any of the Upper Tier II Notes or Lower Tier II Notes, respectively, in order to stabilise or maintain the market price of those notes in Singapore or elsewhere.
These definitions are the “gatekeepers” of the exemption. If the notes are not the specified Upper/Lower Tier II Notes, or if the stabilising activity is not undertaken by UBS Limited (or its related corporations), the exemption will not apply. Similarly, the conduct must be directed to stabilising or maintaining market price, and it must involve buying (or offering/agreeing to buy) the relevant notes.
Regulation 3: Exemption from Sections 197 and 198 of the Act. This is the operative provision. It provides that Sections 197 and 198 of the Securities and Futures Act shall not apply to stabilising action taken in respect of the specified notes within 30 days from the date of issue of the relevant notes.
The exemption is further limited by who may be counterparties to the stabilising trades. Stabilising action must be taken with either:
- a person referred to in section 274 of the Act; or
- a sophisticated investor as defined in section 275(2) of the Act.
For a practitioner, the practical effect is that stabilisation trades must be structured so that the counterparty falls within one of these categories. This is a common regulatory design: rather than allowing stabilisation against the general investing public, the law channels such activity into transactions with persons who meet specified eligibility criteria (for example, institutional or otherwise qualified investors, depending on how sections 274 and 275(2) operate).
Time limitation (30 days from issue). The exemption is not open-ended. It is confined to a period of 30 days from the date of issue of the Upper Tier II Notes or Lower Tier II Notes, as the case may be. Stabilisation outside that window would fall back under the general prohibitions in Sections 197 and 198, unless another exemption applies.
Geographical element. The definition of stabilising action includes actions taken “in Singapore or elsewhere” to stabilise or maintain market price “in Singapore or elsewhere.” This indicates that the exemption is not limited to domestic trading venues; however, the stabilisation must still be performed by UBS Limited (or related corporations) and must relate to the specified notes.
How Is This Legislation Structured?
The Regulations are structured as a compact, three-regulation instrument:
- Regulation 1 sets out the citation and commencement date.
- Regulation 2 provides definitions for the specific notes and for “stabilising action,” including the identity of the stabilising party (UBS Limited and related corporations) and the nature of the conduct (buying or offering/agreeing to buy to stabilise or maintain market price).
- Regulation 3 creates the exemption by disapplying Sections 197 and 198 of the Securities and Futures Act to stabilising action in respect of the defined notes, within the defined 30-day period, and only when undertaken with eligible counterparties (persons under section 274 or sophisticated investors under section 275(2)).
Because there are no additional parts or schedules in the extract provided, the entire legal effect is contained in the definitions and the exemption clause.
Who Does This Legislation Apply To?
Primary beneficiaries: The exemption is designed to benefit UBS Limited and its related corporations when they undertake stabilising action in relation to the specified Chohung Bank Upper Tier II Notes and Lower Tier II Notes. In practice, this includes the trading desks and market-making functions within the UBS group that execute stabilisation trades.
Counterparties: The exemption also depends on the identity of the counterparty. Stabilising action must be taken with either (i) a person referred to in section 274 of the Act, or (ii) a sophisticated investor under section 275(2). Therefore, the Regulations indirectly apply to issuers and arrangers as well, because they must ensure that the stabilisation programme is implemented through eligible counterparties.
Conduct scope: The exemption is limited to stabilising action as defined—buying (or offering/agreeing to buy) the relevant notes to stabilise or maintain market price. It does not provide a general licence for any trading activity; it is tied to the stabilisation purpose and the defined note types.
Why Is This Legislation Important?
For market participants, the Regulations provide a narrow but valuable compliance safe harbour. Sections 197 and 198 of the Securities and Futures Act (as referenced) are part of the broader market conduct framework aimed at preventing improper trading practices, including conduct that could be characterised as market manipulation. Without an exemption, stabilisation activities—particularly those involving buying in the immediate post-issuance period—could create legal risk.
By disapplying those provisions in specified circumstances, the Regulations allow stabilisation programmes to operate with greater certainty. This matters for underwriting and issuance processes, where stabilisation is often used to support liquidity and orderly price discovery during the early trading life of notes.
From a practitioner’s perspective, the key significance lies in the conditions that must be satisfied simultaneously: (1) the notes must be the specified Upper/Lower Tier II Notes issued by Chohung Bank; (2) the stabilising action must be taken by UBS Limited or its related corporations; (3) it must occur within 30 days from the date of issue; and (4) it must be conducted with counterparties falling within section 274 or the sophisticated investor category under section 275(2). Missing any one of these elements could remove the exemption and expose the conduct to enforcement risk.
Finally, the Regulations illustrate a common regulatory approach in Singapore’s market conduct regime: stabilisation is not prohibited per se, but it is permitted only through tightly drawn exemptions that preserve investor protection and market integrity.
Related Legislation
- Securities and Futures Act (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 legislation metadata timeline context).
- Stabilising Act (as referenced in the legislation metadata timeline context).
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. 41) Regulations 2004 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the official text for authoritative provisions.