Statute Details
- Title: Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Notes) (No. 46) Regulations 2004
- Act Code: SFA2001-S704-2004
- Type: Subsidiary Legislation (SL)
- Authorising Act: Securities and Futures Act (Cap. 289)
- Enacting power: Section 337(1) of the Securities and Futures Act
- Commencement: 26 November 2004
- Legislative instrument: SL 704/2004
- Status: Current version as at 27 March 2026 (per the provided extract)
- Key provisions: Section 1 (Citation and commencement), Section 2 (Definitions), Section 3 (Exemption)
- Primary legal effect: Exempts certain “stabilising action” in relation to specified “Notes” from Sections 197 and 198 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. 46) Regulations 2004 (“Stabilising Action Exemption Regulations”) is a targeted regulatory instrument. In plain language, it creates a narrow exemption from market conduct rules that would otherwise restrict or prohibit certain trading behaviour around the issuance of securities.
Specifically, the Regulations address a common feature of securities markets: price stabilisation. When new notes are issued, underwriters or market participants may take steps to support or maintain the market price in the immediate aftermath of issuance. Such activity can, if not carefully controlled, resemble conduct that market conduct laws seek to prevent (for example, misleading market activity or improper dealing). The Regulations therefore carve out a permitted pathway for stabilisation, but only for a defined set of circumstances.
The exemption is not general. It applies only to stabilising action taken in respect of a particular class of notes—US dollar fixed rate notes issued by Rizal Commercial Banking Corporation in November 2004 (up to US$200 million)—and only within a defined time window (30 days from the date of issue). It also limits the eligible stabilising participants to a specified category: a person referred to in Section 274 of the Securities and Futures Act, or a “sophisticated investor” as defined in Section 275(2) of the Act.
What Are the Key Provisions?
Section 1 (Citation and commencement) provides the formal name of the Regulations and states that they come into operation on 26 November 2004. For practitioners, this matters when assessing whether stabilising activity occurred within the legal framework applicable at the time.
Section 2 (Definitions) is central because it defines the scope of the exemption. Two defined terms drive the legal effect:
- “Notes” means the US$ fixed rate notes issued by Rizal Commercial Banking Corporation in November 2004 for a principal amount of up to US$200 million.
- “stabilising action” means an action taken in Singapore or elsewhere by UBS 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 deliberately narrow. The exemption is tied to a specific issuer, specific instrument type, specific issuance timing, and a specific stabilising actor (UBS Limited and related corporations). This means that stabilisation in relation to different notes, different issuers, or by different market participants would not automatically fall within the exemption.
Section 3 (Exemption) is the operative provision. It states that Sections 197 and 198 of the Securities and Futures Act shall not apply to stabilising action taken in respect of the Notes within 30 days from the date of issue, provided the stabilising action is taken with either:
- (a) a person referred to in Section 274 of the Act; or
- (b) a sophisticated investor as defined in Section 275(2) of the Act.
In practical terms, Section 3 authorises stabilisation activity that would otherwise be caught by the market conduct provisions in Sections 197 and 198. While the extract does not reproduce the text of Sections 197 and 198, the structure indicates that those sections impose restrictions on dealing or market manipulation-type conduct. The exemption therefore functions as a permission for stabilisation, but only when the conditions are met.
Time limitation (30 days) is a key compliance point. Even if stabilisation is otherwise legitimate, activity outside the 30-day window would not benefit from this exemption. For counsel advising underwriters or trading desks, this requires careful record-keeping: the “date of issue” must be identified, and all stabilising trades must be mapped to that timeline.
Counterparty limitation is equally important. The exemption is conditional on stabilising action being taken “with” either a Section 274 person or a sophisticated investor. This implies that the exemption is not simply about who is trading (UBS/related corporations) but also about the counterparties or the relevant persons involved in the stabilising arrangements. Practitioners should therefore confirm the identity and status of counterparties and ensure that the transaction documentation reflects the intended category.
How Is This Legislation Structured?
The Regulations are short and structured in three sections:
- Section 1 sets out the citation and commencement.
- Section 2 provides definitions for “Notes” and “stabilising action”.
- Section 3 contains the exemption from specified provisions of the Securities and Futures Act, subject to time and eligibility conditions.
There are no additional parts or schedules in the provided extract, reflecting the Regulations’ purpose as a targeted carve-out rather than a comprehensive market conduct code.
Who Does This Legislation Apply To?
Although the Regulations are made under the Securities and Futures Act, their direct effect is to regulate market conduct by specifying when certain statutory provisions do not apply. The exemption is triggered by the combination of (i) the nature of the instrument (“Notes”), (ii) the nature of the activity (“stabilising action”), (iii) the actor (UBS Limited or its related corporations), (iv) the timing (within 30 days from issue), and (v) the relevant counterparty category (Section 274 person or sophisticated investor).
Accordingly, the Regulations primarily benefit and constrain UBS Limited and its related corporations conducting stabilisation in relation to the specified Rizal Commercial Banking Corporation notes. However, the counterparty conditions mean that other parties involved in the stabilisation arrangements—such as sophisticated investors or persons falling within Section 274—also become relevant to compliance analysis.
For other market participants, the Regulations do not create a general exemption. If a different institution undertakes stabilisation, or if stabilisation relates to different notes, the exemption would not apply unless a separate exemption is issued or the activity otherwise complies with the Securities and Futures Act requirements.
Why Is This Legislation Important?
This Regulations matters because it demonstrates how Singapore’s market conduct framework accommodates legitimate market practices while maintaining regulatory safeguards. Price stabilisation can support orderly markets during issuance, but it can also raise concerns about artificial price support or misleading trading. By exempting stabilising action from Sections 197 and 198, the Regulations effectively recognise that stabilisation—when confined to defined instruments, actors, timeframes, and eligible counterparties—can be consistent with market integrity.
For practitioners, the key significance lies in certainty and boundaries. Without such an exemption, stabilisation activity might be treated as prohibited conduct under Sections 197 and 198. With the exemption, counsel can structure stabilisation programmes with clearer legal footing, provided the conditions are met. This is especially important for underwriting syndicates and trading desks executing time-sensitive transactions around issuance.
From an enforcement and risk perspective, the narrow drafting increases compliance expectations. Because the exemption is limited to specific notes and a specific stabilising actor, regulators and counterparties can more readily assess whether the exemption applies. Practically, this means that documentation—trade logs, communications, and counterparty eligibility assessments—will be crucial in defending the classification of trades as “stabilising action” within the meaning of Section 2 and within the 30-day period in Section 3.
Related Legislation
- Securities and Futures Act (Cap. 289) — in particular:
- Sections 197 and 198 (market conduct provisions from which the exemption applies)
- Section 274 (category of persons relevant to the exemption)
- Section 275(2) (definition of “sophisticated investor”)
- Section 337(1) (authorising provision for making these Regulations)
- Futures Act (referenced in the provided metadata as related legislation)
- Stabilising Act (referenced in the provided metadata as related legislation)
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. 46) Regulations 2004 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the official text for authoritative provisions.