Statute Details
- Title: Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Notes) (No. 46) Regulations 2005
- Act Code: SFA2001-S716-2005
- Legislation Type: Subsidiary legislation (SL)
- Authorising Act: Securities and Futures Act (Cap. 289)
- Authorising Power: Section 337(1) of the Securities and Futures Act
- Commencement: 15 November 2005
- Enacting Date: 2 November 2005
- Regulation Number: SL 716/2005
- 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. 46) Regulations 2005 (“Stabilising Action Exemption Regulations”) is a targeted exemption instrument made under the Securities and Futures Act (SFA). In plain terms, it allows certain market participants to take “stabilising action” in relation to a specific bond/notes issuance without breaching particular market conduct prohibitions in the SFA.
Stabilising action is a practice commonly used in securities offerings to help maintain orderly trading conditions immediately after issuance. However, because stabilisation can affect market prices, securities laws typically impose strict rules to prevent manipulation. This legislation strikes a balance: it permits stabilisation, but only if the stabilising activity falls within tightly defined parameters (who may do it, what instrument is involved, and when it may occur).
Importantly, the exemption is narrow and issuance-specific. The definition of “Notes” is limited to US$ fixed rate notes due November 2012 issued by Korea East-West Power Co., Ltd., with a principal amount up to US$300 million. As a result, the exemption is not a general stabilisation licence for all debt securities; it is an exemption tailored to a particular transaction and set of counterparties.
What Are the Key Provisions?
1. Citation and commencement (Regulation 1)
Regulation 1 provides the short title and states that the Regulations come into operation on 15 November 2005. For practitioners, this matters because the exemption is time-bound: stabilising action must occur within a specified period from the date of issue of the Notes. The commencement date helps confirm the legal availability of the exemption for the relevant issuance window.
2. Definitions (Regulation 2)
Regulation 2 sets the interpretive foundation. The most consequential definitions are:
- “Notes”: US$ fixed rate notes due November 2012 issued by Korea East-West Power Co., Ltd. for a principal amount of up to US$300 million.
- “securities”: refers to the definition in section 239(1) of the SFA.
- “stabilising action”: an action taken in Singapore or elsewhere by specified entities (Barclays Bank PLC, Credit Suisse First Boston (Europe) Limited, Lehman Brothers International (Europe), or their related corporations) to buy, or offer/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 of stabilising action is both activity-specific and person-specific. It is not enough that an entity buys the Notes; the buy (or offer/agree to buy) must be taken for the purpose of stabilising or maintaining the market price, and it must be undertaken by one of the listed stabilising parties (or their related corporations).
3. The exemption from SFA market conduct provisions (Regulation 3)
The core operative provision is Regulation 3. It states that Sections 197 and 198 of the SFA 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 one of the following categories of counterparties:
- (a) an institutional investor
- (b) a “relevant person” as defined in section 275(2) of the SFA
- (c) a person who acquires the Notes as principal, but only if 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. The exemption is not simply “any stabilising action is permitted.” Instead, it is an exemption conditioned on timing (within 30 days from issuance) and counterparty eligibility (institutional investors, relevant persons, or principal acquirers meeting a minimum consideration threshold).
Practical compliance implications
For lawyers advising issuers, arrangers, or stabilising banks, Regulation 3 effectively creates a compliance “safe harbour” for stabilisation activity, but only when the transaction documentation and execution align with the defined categories. In particular:
- Timing controls: stabilising action must be completed within the 30-day post-issuance window. Any stabilising trades outside that period would not fall within the exemption.
- Counterparty diligence: firms must be able to evidence that the counterparty is an institutional investor or a relevant person, or that the principal acquisition meets the $200,000 minimum consideration threshold per transaction.
- Transaction value measurement: the threshold is per transaction and can be satisfied through cash or exchange of securities/other assets, but the firm must track and document the consideration equivalence in foreign currency terms.
How Is This Legislation Structured?
The Regulations are short and comprise:
- Regulation 1 (Citation and commencement): sets the short title and commencement date (15 November 2005).
- Regulation 2 (Definitions): defines “Notes,” “securities,” and “stabilising action,” including the specific stabilising entities and the purpose of stabilisation.
- Regulation 3 (Exemption): provides the exemption from SFA sections 197 and 198 for stabilising action in respect of the defined Notes, within 30 days from issue, subject to counterparty categories and a minimum consideration threshold for principal acquisitions.
There are no additional parts or schedules in the extract provided; the legislative design is intentionally concise, reflecting the transaction-specific nature of the exemption.
Who Does This Legislation Apply To?
The Regulations apply to stabilising action in relation to the defined Notes, but the practical “who” is determined by the definition of stabilising action in Regulation 2. Stabilising action must be taken by Barclays Bank PLC, Credit Suisse First Boston (Europe) Limited, Lehman Brothers International (Europe), or their related corporations. Therefore, the exemption is primarily relevant to those entities (and their corporate groups) when they undertake stabilisation activities.
Additionally, Regulation 3 imposes conditions based on the counterparty to the stabilising trades. The exemption is available only where the stabilising action is taken with an institutional investor, a relevant person, or a principal acquirer meeting the $200,000 per transaction consideration threshold. Accordingly, even where a stabilising bank is one of the defined entities, the exemption will not apply if the stabilising trades are executed with ineligible counterparties or outside the 30-day period.
Why Is This Legislation Important?
For practitioners, the significance of these Regulations lies in their role as a transaction-specific regulatory “permission” within Singapore’s market conduct framework. Stabilisation can be commercially important for issuers and underwriters, particularly in the immediate post-issuance period when liquidity and price discovery are still developing. Without an exemption, stabilising trades might risk triggering prohibitions under the SFA.
By exempting stabilising action from Sections 197 and 198 of the SFA (subject to strict conditions), the Regulations reduce legal uncertainty for stabilising participants. This is especially valuable when stabilisation is conducted “in Singapore or elsewhere,” as the definition contemplates cross-border execution. The exemption therefore supports the practical realities of international bond offerings while maintaining guardrails through eligibility criteria and time limits.
From an enforcement and risk management perspective, the conditions in Regulation 3 are the compliance focal points. Firms should implement controls to ensure that:
- stabilising activity is limited to the defined Notes;
- the stabilising parties remain within the defined group (including related corporations);
- trades occur within the 30-day window from the date of issue;
- counterparties are correctly classified and documented; and
- principal acquisitions meet the minimum consideration threshold per transaction, including where consideration is non-cash.
In short, the Regulations are important because they operationalise lawful stabilisation—turning what could otherwise be a high-risk area of market conduct—into a structured, documentable process.
Related Legislation
- Securities and Futures Act (Cap. 289) — including Sections 197 and 198 (market conduct provisions) and Section 337(1) (making power); Section 239(1) (definition of “securities”); Section 275(2) (definition of “relevant person”).
- Futures Act (as referenced in the legislation metadata timeline context).
- Stabilising Act (as referenced in the legislation metadata timeline context).
- Timeline / Legislation timeline (for version verification and amendment history).
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 2005 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the official text for authoritative provisions.