Statute Details
- Title: Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Notes) (No. 49) Regulations 2004
- Act Code: SFA2001-S722-2004
- Type: Subsidiary Legislation (sl)
- Authorising Act: Securities and Futures Act (Cap. 289)
- Authorising Provision: Section 337(1) of the Securities and Futures Act
- Regulation Number / Citation: SL 722/2004
- Commencement: 8 December 2004
- 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. 49) Regulations 2004 (“Stabilising Action Exemption Regulations”) is a narrowly targeted set of rules made under the Securities and Futures Act (“SFA”). In plain language, it creates a specific exemption from certain market conduct prohibitions where a market participant takes “stabilising action” in relation to a particular issuance of notes.
Stabilisation is a practice commonly associated with securities offerings. The basic idea is that, during the early period after issuance, certain authorised actors may take steps intended to support or maintain the market price of the securities. However, stabilisation can overlap with conduct that market conduct rules generally prohibit—such as manipulative or misleading trading practices. This legislation resolves that tension by carving out an exemption for stabilising activity, but only for a defined set of notes, actors, and time period.
Importantly, the exemption is not a general permission for any stabilisation in any context. It is tied to a specific instrument: US dollar fixed rate notes issued by State Bank of India in December 2004, and it is limited to stabilising actions taken within 30 days from the date of issue. The Regulations also restrict the beneficiaries of the exemption to persons identified in the SFA, or to “sophisticated investors” as defined in the SFA.
What Are the Key Provisions?
1. Citation and commencement (Regulation 1)
Regulation 1 provides the formal citation and states that the Regulations come into operation on 8 December 2004. For practitioners, this matters mainly for determining the temporal scope of the exemption and for aligning compliance assessments with the effective date of the subsidiary legislation.
2. Definitions (Regulation 2)
Regulation 2 defines two central terms: “Notes” and “stabilising action”. These definitions are the backbone of the exemption because they determine what transactions are covered and what conduct qualifies.
“Notes” are defined very specifically as the US dollar fixed rate notes issued by State Bank of India in December 2004, with a principal amount of up to US$1,000,000,000. This specificity is crucial: the exemption is not available for other issuers, other note series, or other currencies. Even if stabilisation is otherwise similar, the exemption will not apply unless the instrument falls within the defined “Notes”.
“Stabilising action” is defined as an action taken in Singapore or elsewhere by Citigroup Global Markets 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. Two elements stand out for legal analysis:
- Actor limitation: the action must be taken by Citigroup Global Markets Limited or its related corporations.
- Purpose and effect limitation: the action must be intended to stabilise or maintain the market price of the Notes.
From a compliance perspective, these definitions mean that documentation and evidence of purpose may be relevant. If a purchase is made for reasons unrelated to stabilisation (for example, ordinary proprietary trading without a stabilisation objective), the conduct may fall outside the exemption.
3. Exemption from sections 197 and 198 of the SFA (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, with respect to stabilising actions taken by either:
- (a) a person referred to in section 274 of the SFA; or
- (b) a “sophisticated investor” as defined in section 275(2) of the SFA.
While the text provided does not reproduce sections 197 and 198, the structure indicates that those sections contain prohibitions or restrictions on certain market conduct. The Regulations effectively neutralise those prohibitions for qualifying stabilising action, but only within the defined window and only for qualifying counterparties/participants.
Time limitation: The exemption applies only to stabilising actions taken within 30 days from the date of issue. This is a bright-line compliance parameter. Practitioners should ensure that any stabilisation programme, orders, and trades are tracked against the issuance date and that any stabilisation activity beyond the 30-day period is assessed separately (and likely without the benefit of the exemption).
Participant limitation: The exemption is available where the stabilising action is taken with a person referred to in section 274 of the SFA or with a sophisticated investor. This suggests that the SFA’s market conduct rules may be sensitive to who is on the other side of the transaction (or who is involved in the relevant dealing). Accordingly, legal teams should confirm the status of counterparties and the basis for treating them as falling within section 274 or as sophisticated investors under section 275(2).
Practical compliance implication: Because the exemption is conditional, it is not enough to show that Citigroup (or its related corporation) bought the Notes. The exemption requires that the stabilising action falls within the defined “stabilising action”, occurs within the 30-day period, and involves the relevant categories of persons. Failure on any element could expose the conduct to the underlying prohibitions in sections 197 and 198.
How Is This Legislation Structured?
The Regulations are extremely short and consist of an enacting formula and three substantive regulations:
- Regulation 1 (Citation and commencement): identifies the instrument and its effective date (8 December 2004).
- Regulation 2 (Definitions): defines “Notes” and “stabilising action”, which determine the scope of the exemption.
- Regulation 3 (Exemption): provides the exemption from specified SFA provisions (sections 197 and 198) for qualifying stabilising action within a defined time period and involving specified categories of persons.
There are no additional parts, schedules, or procedural requirements in the extract provided. The legislative design is therefore “scope-driven”: it relies on precise definitions and narrow conditions rather than on detailed operational rules.
Who Does This Legislation Apply To?
Although the exemption is framed as an exemption from the SFA’s market conduct provisions, the practical beneficiaries are limited. The conduct must be stabilising action taken by Citigroup Global Markets Limited or its related corporations. Therefore, the Regulations primarily affect the compliance posture of that group (and any related entities acting in concert or under related corporate structures).
Additionally, the exemption is conditional on the stabilising action being taken with a person falling within section 274 of the SFA or with a sophisticated investor under section 275(2). This means that the exemption’s availability depends not only on the actor (Citigroup group) but also on the counterparty or relevant dealing context. Lawyers advising issuers, dealers, or trading desks should therefore assess both sides of the transaction and the classification of counterparties.
Why Is This Legislation Important?
This legislation is important because it demonstrates how Singapore’s market conduct framework accommodates market practices like stabilisation while maintaining regulatory control. Without an exemption, stabilisation activity could potentially be characterised as conduct prohibited under general market conduct rules. The Regulations provide legal certainty for a specific stabilisation programme tied to a specific note issuance.
For practitioners, the key value lies in the conditional nature of the exemption. The Regulations do not create a blanket permission. Instead, they require strict alignment with: (i) the defined notes (issuer, currency, fixed rate, issuance month/year, and principal amount cap), (ii) the defined stabilisation actor (Citigroup Global Markets Limited and related corporations), (iii) the defined stabilisation purpose (stabilise or maintain market price), (iv) the defined time window (within 30 days from issue), and (v) the defined category of persons (section 274 persons or sophisticated investors).
From an enforcement and risk perspective, this means that compliance teams should treat the exemption as a checklist exercise. Where stabilisation is contemplated, counsel should ensure that the trading plan, order management, and documentation can support each element. Where any element is uncertain—such as whether a counterparty qualifies as a sophisticated investor—legal advice should be sought early, because the exemption’s protection may not extend to conduct outside its strict terms.
Finally, the Regulations are a useful example of how Singapore uses subsidiary legislation to tailor exemptions to particular transactions. This can inform how lawyers approach other exemptions: rather than reading exemptions as general principles, they should be analysed as transaction-specific legal instruments with precise scope.
Related Legislation
- Securities and Futures Act (Cap. 289) — particularly sections 197, 198, 274, 275(2), and the regulation-making power in section 337(1)
- Futures Act (as referenced in the provided metadata)
- Stabilising Act (as referenced in the provided metadata)
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. 49) Regulations 2004 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the official text for authoritative provisions.