Statute Details
- Title: Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Notes) (No. 45) Regulations 2005
- Act Code: SFA2001-S699-2005
- Type: Subsidiary legislation (SL)
- Authorising Act: Securities and Futures Act (Cap. 289)
- Enacting power: Section 337(1) of the Securities and Futures Act
- Citation: SL 699/2005
- Commencement: 4 November 2005
- Status: Current version (as at 27 March 2026)
- Key provisions: Section 2 (Definitions); Section 3 (Exemption)
What Is This Legislation About?
The Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Notes) (No. 45) Regulations 2005 (“Stabilising Action Exemption Regulations”) creates a targeted regulatory exemption from certain market conduct rules in the Securities and Futures Act (the “SFA”). In plain terms, it allows specified market participants to take “stabilising action” in relation to a particular tranche of notes shortly after issuance, without breaching the prohibitions that would otherwise apply.
The legislation is narrow and instrument-specific. It does not establish a general stabilisation regime for all securities. Instead, it defines “Notes” as a specific 5-year guaranteed notes issuance by Nan Ya Plastics (Hong Kong) Company Limited, guaranteed by Nan Ya Plastics Corporation, up to US$400 million. The exemption is therefore best understood as a bespoke regulatory carve-out for a particular capital markets transaction.
At the centre of the Regulations is the concept of stabilisation: market participants may buy (or offer/agree to buy) the Notes to stabilise or maintain their market price. Such activity can be controversial because it may resemble market manipulation. The exemption addresses that concern by limiting the exemption to stabilising action taken within a strict time window after issuance and by restricting who may rely on it (institutional investors, certain “relevant persons”, and principal acquirers meeting a minimum consideration threshold).
What Are the Key Provisions?
Section 1 (Citation and commencement) provides the formal title and states that the Regulations come into operation on 4 November 2005. For practitioners, this matters for determining whether stabilising action taken in the early post-issuance period falls within the legal framework.
Section 2 (Definitions) is crucial because it determines the scope of the exemption. The Regulations define three key terms:
(1) “Notes” means the 5-year guaranteed notes due November 2010 issued by Nan Ya Plastics (Hong Kong) Company Limited, up to a principal amount of US$400 million, guaranteed by Nan Ya Plastics Corporation. This definition is transaction-specific and effectively “locks” the exemption to that issuance.
(2) “securities” has the same meaning as in section 239(1) of the SFA. This cross-reference ensures that the Notes are treated within the SFA’s broader securities framework.
(3) “stabilising action” means an action taken in Singapore or elsewhere by Citigroup Global Markets Limited, Deutsche Bank AG, Singapore Branch, The Hongkong and Shanghai Banking Corporation Limited, or any of their 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 both participant-specific and purpose-specific: only the named stabilising entities (and their related corporations) may perform the relevant conduct, and the conduct must be for stabilisation/price maintenance.
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 taken with one of the following categories of counterparties/participants:
(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, where 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.
From a compliance perspective, the exemption is therefore conditional on all of the following:
- Instrument: the Notes must fall within the defined issuance.
- Conduct: the action must be “stabilising action” as defined (buy/offer/agree to buy for stabilisation/price maintenance).
- Actors: the action must be taken by the specified stabilising entities (or their related corporations).
- Timing: it must occur within 30 days from the date of issue.
- Counterparty/participant category: the stabilising action must be taken with an institutional investor, a relevant person, or a principal acquirer meeting the minimum consideration threshold.
Although the extract does not reproduce sections 197 and 198 of the SFA, the practical effect is clear: the Regulations remove the risk that stabilising purchases (or offers/agreements to buy) would be treated as prohibited market conduct during the early trading period. For lawyers, this is a classic example of a “safe harbour” style exemption, but with tight boundaries.
How Is This Legislation Structured?
The Regulations are structured as a short instrument with a conventional layout:
- Section 1: Citation and commencement.
- Section 2: Definitions (defining “Notes”, “securities”, and “stabilising action”).
- Section 3: Exemption from specified SFA provisions for stabilising action, subject to timing and participant conditions.
Notably, the Regulations contain no schedules or detailed procedural requirements in the extract provided. Instead, the legal architecture relies on precise definitions and categorical conditions. In practice, the operational compliance burden will often fall on transaction documentation and internal controls to ensure that stabilising activity stays within the defined scope.
Who Does This Legislation Apply To?
The exemption is directed at stabilising action in relation to the defined Notes. It applies to stabilising conduct taken by the specified financial institutions (Citigroup Global Markets Limited, Deutsche Bank AG, Singapore Branch, and The Hongkong and Shanghai Banking Corporation Limited) and their related corporations, when they engage in buying, or offering/agreeing to buy, the Notes to stabilise or maintain market price.
However, the exemption is not available for stabilising action in a vacuum. Section 3 further limits the exemption based on who the stabilising action is taken with: institutional investors, relevant persons (as defined in the SFA), or principal acquirers meeting the $200,000 per transaction minimum consideration threshold (including consideration paid by exchange of securities or other assets). This means that even if the stabilising entity and the Notes are correct, the exemption may not apply if the transaction counterparties do not fit within the specified categories.
Why Is This Legislation Important?
For capital markets practitioners, this Regulations instrument is important because it clarifies when stabilisation activity can occur without triggering prohibitions under the SFA. Stabilisation is often used to support orderly trading and reduce volatility in the immediate aftermath of issuance. Without a clear exemption, stabilising bids could be scrutinised as potentially improper market conduct.
At the same time, the Regulations demonstrate a regulatory approach that balances market confidence with investor protection. The exemption is narrow: it is limited to a specific issuance, a defined set of stabilising institutions, a specific stabilisation purpose, and a strict 30-day post-issuance window. It also imposes counterparty constraints, including a minimum consideration threshold for principal acquirers. These limitations reduce the risk that the exemption becomes a general licence for price support or trading strategies that could be characterised as manipulative.
From an enforcement and litigation perspective, the Regulations provide a defensible legal framework. If stabilising action is challenged, the parties can point to the statutory exemption and demonstrate compliance with each condition. Conversely, if stabilising activity falls outside the defined parameters—such as exceeding the 30-day period, involving different instruments, or dealing with counterparties outside the permitted categories—the exemption would likely not apply, leaving the conduct exposed to the underlying prohibitions in sections 197 and 198 of the SFA.
Related Legislation
- Securities and Futures Act (Cap. 289) — in particular sections 197, 198, 239(1), 275(2), and the regulation-making power in section 337(1)
- Stabilising Act — referenced in the provided metadata (practitioners should verify the exact title and provisions, as the extract does not reproduce it)
- Futures Act — referenced in the provided metadata (practitioners should verify relevance to the specific stabilisation exemption)
- Timeline — for version control and confirmation of the “current version” status
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. 45) Regulations 2005 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the official text for authoritative provisions.