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
- Legislation Type: Subsidiary Legislation (SL)
- Authorising Act: Securities and Futures Act (SFA) (Cap. 289)
- Power Used: Section 337(1) of the Securities and Futures Act
- Commencement: 19 November 2004
- Enacting Authority: Monetary Authority of Singapore (MAS)
- Regulation Number: SL 696/2004
- Status: Current version as at 27 March 2026 (per the legislation portal status indicator)
- Key Provisions: Section 2 (definitions); Section 3 (exemption)
- Relevant SFA Provisions Exempted: Sections 197 and 198 of the Securities and Futures Act
- Relevant Investor Categories Referenced: Section 274 persons; Section 275(2) sophisticated investors
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 is a targeted regulatory instrument that creates a narrow exemption from certain market conduct rules in the Securities and Futures Act (SFA). In plain terms, it allows specified parties to take “stabilising action” in relation to a particular bond issuance—without breaching the SFA provisions that would otherwise restrict or prohibit certain market manipulation-type conduct.
The regulations are not a general framework for stabilisation across all securities. Instead, they are issuance-specific. The “Notes” are defined as 7-year fixed rate senior notes due November 2011 issued by STATS ChipPAC Ltd., up to a principal amount of US$250 million. This means the exemption is designed for a particular capital markets transaction, rather than for ongoing or broad categories of offerings.
Stabilisation is a common feature of some debt and equity offerings. Market participants may buy (or offer to buy) securities shortly after issuance to help maintain orderly trading and reduce volatility. However, stabilising activity can resemble prohibited conduct if not carefully bounded. These regulations therefore carve out a controlled exception, permitting stabilising purchases within a defined time window and only in relation to specified counterparties.
What Are the Key Provisions?
1. Citation and commencement (Regulation 1)
Regulation 1 provides the short title and confirms that the regulations came into operation on 19 November 2004. For practitioners, this matters because the exemption is only available for stabilising action taken after the regulations are in force (subject to the regulations’ own temporal conditions in section 3).
2. Definitions (Regulation 2)
Regulation 2 is central because it tightly defines the scope of the exemption.
- “Notes” are defined 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.
- “Stabilising action” is defined as an action taken in Singapore or elsewhere by Deutsche Bank AG (or any of its related corporations) to buy, or 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 two reasons. First, it identifies the stabilising party: Deutsche Bank AG (and its related corporations). Second, it requires a stabilisation purpose—actions must be taken to stabilise or maintain market price, not for unrelated trading objectives.
3. The exemption from SFA sections 197 and 198 (Regulation 3)
The operative provision is Regulation 3. It states that Sections 197 and 198 of the Act shall not apply to stabilising action taken in respect of any of the Notes, within 30 days from the date of issue, with stabilising action being permitted only when the counterparty is within specified categories.
In practical terms, Regulation 3 creates a time-limited “safe harbour” for stabilising activity. The exemption applies only if all conditions are satisfied:
- Subject matter: stabilising action must relate to the defined “Notes” (STATS ChipPAC Ltd. 7-year fixed rate senior notes due November 2011).
- Time window: the stabilising action must be taken within 30 days from the date of issue.
- Counterparty category: the 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.
Why the counterparty limitation matters
The regulation does not simply permit stabilisation against “any market participant.” It restricts the exemption to stabilising action taken with counterparties falling within the SFA’s defined categories (section 274 persons and sophisticated investors under section 275(2)). For counsel, this is a key compliance point: stabilisation arrangements must be structured so that trades occur only with permitted counterparties, or else the exemption may not apply and the SFA market conduct prohibitions could be engaged.
4. Administrative and drafting signals
Although the extract provided does not reproduce the full text of sections 197 and 198, the structure indicates that those sections likely contain prohibitions or restrictions relating to market conduct (commonly including provisions addressing false or misleading conduct, market manipulation, or improper trading practices). Regulation 3’s drafting—“shall not apply”—is the hallmark of a statutory exemption. It does not merely reduce penalties; it removes the applicability of the specified SFA provisions for qualifying stabilising action.
How Is This Legislation Structured?
This subsidiary legislation is concise and consists of an enacting formula and three substantive regulations:
- Regulation 1 (Citation and commencement): sets the short title and commencement date.
- Regulation 2 (Definitions): defines “Notes” and “stabilising action,” including the issuer, security characteristics, stabilising party, and stabilisation purpose.
- Regulation 3 (Exemption): provides the exemption from SFA sections 197 and 198 for stabilising action within a specified period and with specified counterparty categories.
There are no additional parts or complex schedules in the extract. The legislation is therefore best understood as a narrowly tailored exemption instrument rather than a comprehensive market conduct regime.
Who Does This Legislation Apply To?
The regulations apply to stabilising action in relation to the defined Notes. Because “stabilising action” is defined as an action taken by Deutsche Bank AG (or its related corporations), the practical beneficiaries are the stabilising dealer and its group entities. However, the exemption’s effect is also relevant to other parties involved in the issuance and trading ecosystem—such as arrangers, issuers, and counterparties—because the exemption may determine whether certain trades are legally permissible without triggering the SFA provisions being exempted.
In addition, the exemption is conditional on the counterparty being within the categories referenced in the SFA: persons under section 274 or sophisticated investors under section 275(2). Accordingly, counterparties and trading counterparties must be assessed against these statutory definitions to confirm that stabilising trades fall within the exemption.
Why Is This Legislation Important?
For practitioners, the importance of this regulation lies in its role as a transaction-specific compliance mechanism. Stabilisation activity can be commercially desirable but legally sensitive. Without an exemption, stabilising purchases could be argued to fall within prohibited market conduct rules, exposing the stabilising dealer and related parties to regulatory action or enforcement risk.
This regulation provides a controlled pathway: it allows stabilising action by a named stabilising dealer, within a defined post-issuance period, and only with specified types of counterparties. The legal significance is that it removes the applicability of the SFA provisions (sections 197 and 198) for qualifying trades. That is a substantial protection for market participants who structure stabilisation programmes carefully.
From a practical standpoint, counsel should treat the regulation as a checklist instrument. Key diligence questions include: (i) whether the instrument traded is the exact “Notes” described; (ii) whether the stabilising action is taken within 30 days from the date of issue; (iii) whether the stabilising party is Deutsche Bank AG or its related corporations; and (iv) whether each stabilising trade is with a counterparty that qualifies under section 274 or is a sophisticated investor under section 275(2). Failure on any of these points could mean the exemption does not apply, leaving the stabilisation activity potentially subject to the SFA’s market conduct prohibitions.
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 legislation metadata as part of the broader regulatory ecosystem (though not directly evidenced in the provided extract).
- Stabilising Act — referenced in the legislation metadata; relevant context for stabilisation concepts.
- Timeline — the legislation portal timeline indicates the version date (19 November 2004) and current-version status as at 27 March 2026.
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.