Statute Details
- Title: Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Notes) (No. 43) Regulations 2004
- Act Code: SFA2001-S690-2004
- Type: Subsidiary Legislation (sl)
- Status: Current version (as at 27 Mar 2026)
- Commencement: 17 November 2004
- Enacting Authority: Monetary Authority of Singapore (MAS)
- Authorising Act: Securities and Futures Act (Cap. 289), specifically section 337(1)
- Key Provisions: Section 1 (Citation and commencement); Section 2 (Definitions); Section 3 (Exemption)
- Regulation Number: SL 690/2004
What Is This Legislation About?
The Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Notes) (No. 43) Regulations 2004 is a targeted regulatory instrument that creates a specific exemption from certain market conduct rules under the Securities and Futures Act (SFA). In essence, it permits a particular kind of “stabilising action” in relation to a defined issuance of notes, during a limited time window after the notes are issued.
In plain language, the Regulations address a common feature of securities issuance: underwriters or issuers may take steps shortly after a new bond or note is launched to support or maintain its market price. Such activity can otherwise be treated as potentially manipulative or as falling within prohibitions on improper dealings. This Regulations provides a narrow carve-out so that stabilisation can occur without breaching the specified SFA provisions—provided the stabilisation is carried out by the authorised parties and within the prescribed period.
Importantly, the exemption is not general. The Regulations define “Notes” very specifically (a particular 5-year fixed rate notes issuance by CITIC Ka Wah Bank Limited) and define “stabilising action” by reference to the stabilising entity (The Hongkong and Shanghai Banking Corporation Limited and its related corporations). The exemption also applies only to stabilising action taken within 30 days from the date of issue of the notes, and only in relation to stabilisation involving certain categories of counterparties (persons referred to in section 274 of the SFA, or sophisticated investors as defined in section 275(2) of the SFA).
What Are the Key Provisions?
Section 1 (Citation and commencement) is straightforward. It provides the short title of the Regulations and states that they come into operation on 17 November 2004. For practitioners, this matters because the exemption is tied to the regulatory framework in force at the time of the relevant stabilisation activity.
Section 2 (Definitions) is the core interpretive gateway. It defines two terms that control the scope of the exemption:
- “Notes” means the 5-year fixed rate notes due November 2009 issued by CITIC Ka Wah Bank Limited for a principal amount of up to US$400,000,000.
- “stabilising action” means an action taken in Singapore or elsewhere by The Hongkong and Shanghai Banking Corporation 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.
These definitions are legally significant because they confine the exemption to a particular instrument and a particular stabiliser. If a different note is involved, or if the stabilising activity is carried out by a different entity (not within the defined group), the exemption would not apply. Similarly, the definition focuses on stabilisation through buying (or offers/agreements to buy), not on other forms of market support.
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, provided the stabilising action is carried out 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.
From a practitioner’s perspective, this is a two-part limitation: (1) a time limit (30 days from issue), and (2) a counterparty eligibility requirement (transactions with specified persons or sophisticated investors). Even if stabilisation is otherwise within the defined “stabilising action” and relates to the defined “Notes,” the exemption would fail if the stabiliser dealt with the wrong type of counterparty.
While the extract does not reproduce sections 197 and 198 of the SFA, the structure indicates that those sections contain prohibitions or restrictions relevant to market conduct—likely including rules that could otherwise capture stabilisation activity as improper dealing. The Regulations therefore function as a statutory permission: they suspend the application of those prohibitions for the specified stabilisation scenario.
How Is This Legislation Structured?
The Regulations are compact and consist of three substantive provisions:
- Section 1 sets out the citation and commencement.
- Section 2 provides definitions that narrow the scope of the exemption.
- Section 3 provides the exemption, specifying which SFA provisions are disapplied, the time period, the eligible counterparties, and the relevant notes.
There are no additional parts or schedules in the extract, reflecting the Regulations’ purpose as a targeted exemption instrument rather than a comprehensive market conduct code.
Who Does This Legislation Apply To?
The Regulations apply to parties involved in stabilising action relating to the defined notes. In practice, the exemption is most relevant to the stabilising entity—The Hongkong and Shanghai Banking Corporation Limited and its related corporations—because the definition of “stabilising action” is anchored to their conduct. However, the exemption also depends on the nature of the counterparty: stabilising action must be taken with a person referred to in section 274 of the SFA or with a sophisticated investor under section 275(2).
Accordingly, the Regulations do not operate as a blanket permission for any market participant to stabilise any notes. They are designed for a specific issuance and a specific stabilisation arrangement. For legal advisers, this means due diligence should focus on: (i) whether the instrument matches the definition of “Notes”; (ii) whether the stabiliser is within the defined group; (iii) whether the activity occurs within the 30-day post-issue window; and (iv) whether the counterparties fall within the SFA-defined categories.
Why Is This Legislation Important?
This Regulations is important because it clarifies the boundary between permissible stabilisation and prohibited market conduct. Without an exemption, stabilising purchases or offers to buy could be argued to fall within broader restrictions on dealing practices. By disapplying sections 197 and 198 of the SFA for a narrow set of circumstances, MAS provides legal certainty for underwriting and stabilisation strategies in connection with the issuance of the specified notes.
From a compliance and risk-management perspective, the Regulations highlight that stabilisation is not “free-standing” permission. It is conditional. The time limit (30 days from issue) is a critical compliance parameter: stabilisation activity outside that window would not benefit from the exemption. Similarly, the counterparty limitation requires careful classification of counterparties—particularly where transactions are executed through intermediaries or where investor status may not be obvious without documentation.
For practitioners advising issuers, arrangers, or financial institutions, the Regulations also serve as a template for how Singapore approaches stabilisation exemptions: define the instrument, define the stabiliser, define the conduct, and then disapply specific prohibitions for a limited period and eligible counterparties. This approach supports market integrity while allowing practical mechanisms that can improve initial liquidity and price discovery for newly issued notes.
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 (referenced in the statute metadata context)
- Stabilising Act (referenced in the statute metadata context)
- Timeline (legislation timeline reference 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. 43) Regulations 2004 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the official text for authoritative provisions.