Statute Details
- Title: Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Notes) (No. 48) Regulations 2005
- Act Code: SFA2001-S729-2005
- Legislation Type: Subsidiary Legislation (SL)
- Authorising Act: Securities and Futures Act (Cap. 289) (“SFA”)
- Enacting Power: Section 337(1) of the SFA
- Citation: SL 729/2005
- Commencement: 22 November 2005
- Status: Current version as at 27 March 2026 (per provided extract)
- 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. 48) Regulations 2005 is a targeted set of exemption regulations made under the Securities and Futures Act. In plain terms, it carves out a narrow legal permission for certain “market stabilising” activities relating to a specific issuance of Euro notes by Korea National Housing Corporation in November 2005.
Under the SFA’s market conduct framework, certain trading behaviours can be prohibited because they may distort market prices or mislead investors. However, market stabilisation is a recognised practice in some capital markets: an arranger or its affiliates may buy (or offer to buy) securities shortly after issuance to help maintain orderly trading and reduce excessive price volatility.
This legislation does not create a general stabilisation regime for all securities. Instead, it provides a time-limited and issuer-specific exemption from two particular SFA provisions (sections 197 and 198) for stabilising action taken in respect of defined “Notes”, subject to strict conditions. The exemption is also limited to stabilising action taken by The Hongkong and Shanghai Banking Corporation Limited (HSBC) or its related corporations.
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 22 November 2005. For practitioners, this matters because the exemption only becomes available from the commencement date, and the stabilising period in Regulation 3 is calculated from the “date of issue of the Notes”.
2. Definitions (Regulation 2)
Regulation 2 is crucial because the exemption is only available if the activity fits precisely within the defined terms. The Regulations define:
- “Notes”: the Euro notes issued in November 2005 by Korea National Housing Corporation for a principal amount of up to Euro 700 million.
- “securities”: adopts the meaning in section 239(1) of the SFA.
- “stabilising action”: an action taken in Singapore or elsewhere by HSBC 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.
Practically, these definitions mean that the exemption is not available to other dealers, arrangers, or investors unless they act through HSBC or its related corporations (as defined). It also means that the stabilising purpose must be to stabilise or maintain the market price—mere trading for investment purposes would not qualify.
3. The exemption from sections 197 and 198 (Regulation 3)
The operative provision is Regulation 3. It states that sections 197 and 198 of the SFA shall not apply to any stabilising action taken in respect of any of the Notes, within 30 days from the date of issue of the Notes, provided the stabilising action is taken with one of the following 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 is not less than $200,000 (or its equivalent) for each transaction—whether paid in cash or by exchange of securities or other assets.
Time limitation: The stabilising action must occur within 30 days from the date of issue. This is a hard boundary. If stabilising purchases or offers occur outside the 30-day window, the exemption would not apply and the general prohibitions in sections 197 and 198 would potentially be engaged.
Counterparty limitation: The exemption is also conditional on who the stabilising trades are with. This is designed to ensure that stabilisation is conducted in a controlled manner, typically involving sophisticated market participants (institutional investors and relevant persons) or principal acquirers meeting a minimum consideration threshold.
Minimum consideration threshold (Regulation 3(c)): Where the counterparty is a principal acquirer, the Regulations require a minimum consideration of $200,000 (or equivalent). This threshold applies per transaction and covers both cash and non-cash consideration (including exchange of securities or other assets). For deal teams, this requires careful documentation of transaction values and the form of consideration.
Scope of “stabilising action”: Because “stabilising action” includes not only actual purchases but also offers or agreements to buy, the exemption may extend to certain pre-trade commitments. However, the action must still be taken by HSBC (or related corporations) and must be for the stabilising purpose.
How Is This Legislation Structured?
Although the Regulations are short, they follow a standard subsidiary legislation structure:
- Regulation 1 (Citation and commencement) sets the name and effective date.
- Regulation 2 (Definitions) defines the specific instruments (“Notes”) and the relevant conduct (“stabilising action”), as well as cross-references to the SFA’s definitions.
- Regulation 3 (Exemption) provides the legal relief: it disapplies sections 197 and 198 of the SFA for stabilising action meeting the time, counterparty, and minimum consideration conditions.
There are no additional parts or schedules in the extract provided. The entire regulatory effect is concentrated in Regulation 3, supported by the precision of Regulation 2.
Who Does This Legislation Apply To?
The Regulations apply to persons who conduct stabilising action in relation to the defined “Notes” (Korea National Housing Corporation Euro notes issued in November 2005 up to Euro 700 million). The exemption is specifically tied to stabilising action taken by HSBC or its related corporations, acting in Singapore or elsewhere, to stabilise or maintain the market price of the Notes in Singapore or elsewhere.
In practical terms, the exemption is most relevant to:
- HSBC and its related corporations involved in the stabilisation programme;
- Deal counsel and compliance teams advising on whether particular trades, offers, or agreements fall within the exemption; and
- Counterparties (institutional investors, relevant persons, or principal acquirers) where the exemption’s conditions affect whether stabilising conduct is lawful under the SFA’s market conduct rules.
However, the exemption is not available to all market participants. If a different financial institution conducts stabilising trades, or if stabilisation is conducted outside the 30-day period, the disapplication of sections 197 and 198 would not apply.
Why Is This Legislation Important?
This Regulations is important because it demonstrates how Singapore’s market conduct regime balances investor protection with practical market functioning. Stabilisation can help reduce disorderly trading immediately after issuance, but it also carries the risk of price manipulation. By disapplying sections 197 and 198 only for a narrowly defined stabilisation activity, the law permits a controlled exception without opening the door to broad exemptions.
For practitioners, the key value lies in the precision of the exemption. The Regulations require strict compliance with: (i) the identity of the Notes; (ii) the identity of the stabilising party (HSBC or related corporations); (iii) the stabilising purpose; (iv) the timing (within 30 days from issue); and (v) the counterparty categories and minimum consideration threshold. These are the elements that will likely be examined in any regulatory review or in internal compliance audits.
From an enforcement perspective, the disapplication of sections 197 and 198 means that, for qualifying stabilising action, the specific prohibitions in those sections do not apply. But outside the exemption, the general market conduct prohibitions remain relevant. Therefore, legal teams should treat this Regulations as a compliance “map”: it identifies when stabilisation is permitted and when it is not.
Related Legislation
- Securities and Futures Act (Cap. 289) — in particular, sections 197, 198, 239(1), 275(2), and the regulation-making power in 337(1).
- Futures Act (as referenced in the provided metadata context)
- Stabilising Act (as referenced in the provided metadata context)
- Timeline (legislation timeline reference in the provided extract)
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. 48) Regulations 2005 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the official text for authoritative provisions.