Statute Details
- Title: Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Notes) (No. 44) Regulations 2005
- Act Code: SFA2001-S696-2005
- Type: Subsidiary Legislation (SL)
- Authorising Act: Securities and Futures Act (SFA) (Cap. 289)
- Enacting power: Section 337(1) of the Securities and Futures Act
- Commencement: 2 November 2005
- Legislative status: Current version as at 27 March 2026 (per the provided extract)
- Key provisions: Section 2 (definitions); Section 3 (exemption)
- Regulatory authority: Monetary Authority of Singapore (MAS)
- Regulation number: SL 696/2005
What Is This Legislation About?
The Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Notes) (No. 44) Regulations 2005 (“Stabilising Action Exemption Regulations”) creates a targeted exemption from certain market conduct rules in the Securities and Futures Act (SFA). In practical terms, it allows specified stabilising activities to occur in relation to particular debt securities (the “Notes”) without triggering the prohibitions that would otherwise apply.
Stabilising action is a familiar feature of capital markets practice. When new securities are issued, market prices may be volatile. Under certain conditions, a stabilising manager or its related entities may buy, or offer to buy, securities to help stabilise or maintain market price levels. However, market conduct legislation typically restricts trading practices that could be seen as manipulative or misleading. This subsidiary legislation reconciles those competing objectives by carving out a narrow exemption for stabilising conduct—provided the stabilising activity fits within the defined scope and timing.
Although the Regulations are Singapore-based, the definition of “stabilising action” expressly covers actions taken “in Singapore or elsewhere” by UBS AG (and its related corporations). The exemption is therefore designed to accommodate cross-border issuance and trading activity while still preserving Singapore’s market integrity framework.
What Are the Key Provisions?
1. Citation and commencement (Regulation 1)
Regulation 1 provides the short title and states that the Regulations came into operation on 2 November 2005. For practitioners, this matters when assessing whether stabilising conduct occurred within the legal framework applicable at the time of the relevant transactions.
2. Definitions (Regulation 2)
The Regulations contain three core definitions that determine the scope of the exemption:
- “Notes”: The exemption is limited to two specific series of notes issued by The Republic of Korea, with specified coupon rates, maturities, and maximum principal amounts:
- 3.625% notes due November 2015, principal amount up to EUR 500 million; and
- 5.625% fixed rate notes due November 2025, principal amount up to US$400 million.
- “securities”: This uses the SFA definition by reference to section 239(1) of the Act, ensuring the exemption operates within the Act’s established classification framework.
- “stabilising action”: This is defined as an action taken in Singapore or elsewhere by UBS 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.
From a compliance perspective, the definition is both person-specific (UBS AG and related corporations) and purpose-specific (stabilising or maintaining market price). It also includes not only actual purchases but also offers or agreements to buy, which is important for understanding how stabilisation may be implemented through conditional orders or contractual arrangements.
3. The exemption from sections 197 and 198 of the SFA (Regulation 3)
The heart of the Regulations is Regulation 3. It provides that sections 197 and 198 of the SFA shall not apply to stabilising action taken in respect of the Notes, subject to strict conditions.
Timing condition: The stabilising action must be taken within 30 days from the date of issue of the Notes. This is a hard temporal limit. Practitioners should therefore identify the “date of issue” precisely (typically the issuance date stated in the offering documentation) and ensure that stabilising activity is confined to the permitted window.
Counterparty/person condition: The exemption applies only if the stabilising action is taken with one of the following categories of persons:
- (a) an institutional investor;
- (b) a relevant person as defined in section 275(2) of the SFA; or
- (c) a person who acquires the Notes as principal, provided that the consideration for the acquisition is not less than $200,000 (or its equivalent in a foreign currency) for each transaction, whether paid in cash or by exchange of securities or other assets.
This structure is significant. It limits the exemption to transactions involving sophisticated or high-value counterparties, reducing the risk that stabilising conduct could be used to influence retail investors or to mask manipulative trading. The “relevant person” concept (by reference to section 275(2)) is also a gatekeeping mechanism: it ties the exemption to the SFA’s broader regulatory taxonomy of persons who are subject to particular market conduct expectations.
Minimum consideration threshold: For principal acquisitions (Regulation 3(c)), the exemption requires a minimum consideration of $200,000 per transaction. The threshold applies regardless of whether consideration is paid in cash or through exchange of securities or other assets. Practitioners should therefore ensure that trade documentation and settlement records can evidence compliance with this minimum threshold.
Practical compliance takeaway: The exemption is not a blanket permission to stabilise. It is a conditional carve-out that depends on (i) the specific Notes, (ii) the stabiliser (UBS AG/related corporations), (iii) the purpose (price stabilisation), (iv) the timing (within 30 days from issue), and (v) the identity and status/value of counterparties.
How Is This Legislation Structured?
The Regulations are concise and consist of an enacting formula followed by three substantive provisions:
- Regulation 1 (Citation and commencement): establishes the name and commencement date.
- Regulation 2 (Definitions): defines “Notes”, “securities”, and “stabilising action”. These definitions are essential because they determine the scope of the exemption.
- Regulation 3 (Exemption): sets out the exemption from SFA sections 197 and 198, together with the conditions (30-day period and qualifying counterparties/consideration thresholds).
There are no additional parts or schedules in the extract provided, reflecting the Regulations’ function as a targeted exemption instrument rather than a comprehensive market conduct code.
Who Does This Legislation Apply To?
In substance, the Regulations apply to stabilising action in relation to the defined “Notes” when undertaken by UBS AG or its related corporations. The exemption is therefore most relevant to the stabilising manager, its trading desks, and any related entities that may execute stabilisation trades or enter into arrangements to buy the Notes.
However, the exemption also depends on the counterparty to the stabilising trades. It covers stabilising action involving institutional investors, “relevant persons” (as defined in the SFA), and principal acquirers meeting the minimum consideration threshold. Accordingly, the Regulations indirectly impose compliance requirements on how stabilising trades are structured and documented, including how counterparties are classified and how transaction values are evidenced.
Why Is This Legislation Important?
This subsidiary legislation is important because it provides legal certainty for a specific stabilisation scenario in Singapore’s market conduct framework. Without an exemption, stabilising trades could potentially fall within the prohibitions in SFA sections 197 and 198, exposing the stabilising manager and related entities to regulatory risk. By carving out stabilising action that meets defined conditions, the Regulations support orderly market functioning during the initial trading period after issuance.
For practitioners, the value lies in the precision of the carve-out. The exemption is not generic; it is tied to particular note series (Republic of Korea notes with specified coupons and maximum principal amounts), a particular stabiliser (UBS AG and related corporations), and a defined stabilisation window (30 days from issue). This precision reduces ambiguity and helps compliance teams implement controls—such as trade monitoring for timing, counterparty eligibility checks, and transaction value thresholds.
From an enforcement perspective, the conditions also reflect a policy choice: stabilisation is permitted only where counterparties are sufficiently sophisticated (institutional investors, relevant persons) or where principal acquisitions meet a meaningful minimum consideration threshold. This helps mitigate the risk that stabilisation could be used to distort prices in ways that harm less informed market participants.
Related Legislation
- Securities and Futures Act (Cap. 289) — in particular:
- Sections 197 and 198 (market conduct prohibitions from which the exemption is granted)
- Section 337(1) (power to make exemption regulations)
- Section 239(1) (definition of “securities”)
- Section 275(2) (definition of “relevant person”)
- Futures Act (not directly operative in the extract, but referenced in the provided metadata)
- Stabilising Act (referenced in the provided metadata)
- Timeline (legislation versioning reference)
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 2005 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the official text for authoritative provisions.