Statute Details
- Title: Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Notes) (No. 44) Regulations 2004
- Act Code: SFA2001-S696-2004
- Type: Subsidiary Legislation (SL)
- Authorising Act: Securities and Futures Act (Cap. 289)
- Enacting power: Section 337(1) of the Securities and Futures Act
- Commencement: 19 November 2004
- Regulation number: SL 696/2004
- Status: Current version (as at 27 March 2026)
- Key provisions: Regulation 1 (citation and commencement), Regulation 2 (definitions), Regulation 3 (exemption)
- Relevant Act provisions referenced: Sections 197 and 198; sections 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. 44) Regulations 2004 (“Stabilising Action Exemption Regulations”) is a narrow, transaction-specific set of rules made under the Securities and Futures Act (SFA). In plain terms, it creates a legal “carve-out” from certain market conduct restrictions when stabilising activity is carried out in relation to a particular bond issuance.
Market conduct rules in the SFA are designed to protect investors and market integrity by restricting manipulative or misleading trading practices. However, in certain capital markets transactions—particularly new issues—market participants may engage in “stabilising action” to help manage short-term price volatility after issuance. Stabilisation can be beneficial, but it also creates a risk that stabilising trades could be used as a cover for improper market manipulation. The law therefore generally regulates or prohibits such conduct, unless it fits within a permitted framework.
This subsidiary legislation does not establish a general stabilisation regime for all securities. Instead, it provides a targeted exemption for stabilising action relating to a defined set of notes: 7-year fixed rate senior notes due November 2011 issued by STATS ChipPAC Ltd., up to a specified principal amount. The exemption applies only within a defined time window—30 days from the date of issue—and only when the stabilising action is undertaken by specified categories of persons (or in respect of specified investor categories).
What Are the Key Provisions?
Regulation 1 (Citation and commencement). The Regulations may be cited as the “Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Notes) (No. 44) Regulations 2004” and come into operation on 19 November 2004. For practitioners, this matters because the exemption is only available for stabilising action carried out after the Regulations take effect (subject to the Regulations’ own internal timing conditions).
Regulation 2 (Definitions). The Regulations define two critical terms: “Notes” and “stabilising action”. The “Notes” are specifically identified as the 7-year fixed rate senior notes due November 2011 issued by STATS ChipPAC Ltd. for a principal amount of up to US$250 million. This definition is highly restrictive: it ties the exemption to a particular issuer, maturity, coupon type (fixed rate), and issuance size cap.
The definition of “stabilising action” is also carefully framed. It means an action taken in Singapore or elsewhere by Deutsche Bank AG (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. This definition is important for compliance because it limits the exemption to actions that (i) are undertaken by the specified entity/entities, (ii) involve buying or offers/agreements to buy, and (iii) are genuinely aimed at stabilisation/price maintenance.
Regulation 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 by either:
- a person referred to in section 274 of the Act; or
- a “sophisticated investor” as defined in section 275(2) of the Act.
In practical terms, Regulation 3 creates a time-limited exemption from the SFA’s market conduct prohibitions (as contained in sections 197 and 198) for stabilising trades in the defined notes. The exemption is not open-ended: it is limited to a 30-day post-issuance window. It is also not universal: it is limited to stabilising action undertaken by persons within the relevant statutory categories (section 274 persons) or in relation to sophisticated investors (section 275(2)).
For a lawyer advising issuers, arrangers, or dealers, the key compliance task is to map the parties involved in the stabilisation programme to the statutory categories in sections 274 and 275(2), and to ensure that the stabilising activity is confined to the defined notes and the 30-day period. If stabilising action falls outside these boundaries—different notes, different issuer, different stabiliser entity, or trades beyond the 30-day window—the exemption would not apply, and the general prohibitions in sections 197 and 198 could be engaged.
How Is This Legislation Structured?
The Regulations are structured as a short instrument with three substantive provisions:
(1) Regulation 1 sets out the citation and commencement date.
(2) Regulation 2 provides definitions that determine the scope of the exemption. In particular, it defines the exact notes and the exact stabilising conduct and stabiliser.
(3) Regulation 3 provides the exemption itself, specifying the SFA sections that are disapplied, the time period (30 days from issue), and the categories of persons/investors to which the exemption applies.
Notably, the Regulations do not include detailed procedural requirements (such as reporting, notices, or record-keeping) within the text provided. Instead, they operate as a legal disapplication of certain SFA provisions, leaving practitioners to ensure that any other applicable regulatory obligations (for example, general licensing, disclosure, or other market conduct requirements) are satisfied under the broader SFA framework and any related MAS requirements.
Who Does This Legislation Apply To?
The exemption is directed at stabilising action in relation to the defined STATS ChipPAC notes. The stabilising action is defined as being taken by Deutsche Bank AG or its related corporations. Accordingly, the primary practical beneficiaries are the stabilising dealer(s) conducting the stabilisation programme and the transaction participants coordinating with them.
However, Regulation 3 also conditions the exemption on the stabilising action being taken with respect to either (i) a person referred to in section 274 of the SFA or (ii) a sophisticated investor as defined in section 275(2). This means that even if the stabiliser is the defined entity and the trades relate to the defined notes, the exemption’s availability depends on the statutory status of the relevant counterparties or persons involved in the stabilising activity. Lawyers should therefore treat the “section 274 person” and “sophisticated investor” conditions as gatekeeping requirements.
Why Is This Legislation Important?
This legislation is important because it illustrates how Singapore’s market conduct framework balances investor protection with the practical realities of securities issuance. Stabilisation can support orderly price formation in the immediate aftermath of a new bond issue. Without an exemption, stabilising trades could be treated as potentially prohibited market conduct under the SFA, discouraging legitimate stabilisation activity and potentially harming liquidity and price discovery.
At the same time, the Regulations are deliberately narrow. They identify a specific issuer and instrument, restrict the stabiliser to Deutsche Bank AG and related corporations, and limit the exemption to a short, post-issuance period of 30 days. These constraints reduce the risk that the exemption becomes a general permission for trading practices that could be inconsistent with market integrity.
From an enforcement and compliance perspective, the Regulations’ narrow scope means that practitioners must be meticulous. The exemption is not merely about “stabilising” in a generic sense; it is about stabilising the defined Notes, by the defined stabiliser, within the defined timeframe, and in relation to the defined categories of persons/investors. Any deviation can expose parties to liability under the disapplied provisions reactivated by the absence of exemption.
Related Legislation
- Securities and Futures Act (Cap. 289) — particularly sections 197, 198, 274, 275(2), and the regulation-making power in section 337(1)
- Futures Act (referenced in the provided metadata as related legislation)
- Stabilising Act (referenced in the provided metadata as related legislation)
- Timeline (legislation timeline reference in the provided metadata)
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. 44) Regulations 2004 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the official text for authoritative provisions.