Statute Details
- Title: Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Notes) (No. 49) Regulations 2005
- Act Code: SFA2001-S730-2005
- Type: Subsidiary Legislation (sl)
- Authorising Act: Securities and Futures Act (Cap. 289)
- Enacting Power: Section 337(1) of the Securities and Futures Act
- Commencement: 23 November 2005
- Legislative Status: Current version as at 27 March 2026 (per the provided extract)
- Key Provisions: Section 2 (Definitions); Section 3 (Exemption)
- Regulatory Focus: Exemption from market conduct provisions for stabilising actions relating to specified notes
What Is This Legislation About?
The Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Notes) (No. 49) Regulations 2005 (“Stabilising Action Exemption Regulations”) is a targeted regulatory instrument made under the Securities and Futures Act (“SFA”). In plain language, it carves out a narrow exemption that allows certain market participants to take “stabilising action” in relation to a specific issuance of notes without being caught by particular market conduct prohibitions in the SFA.
Stabilisation is a practice commonly used in securities offerings to support or maintain the market price of newly issued instruments during the initial trading period. However, market conduct rules are designed to prevent manipulative or misleading conduct. This legislation reconciles those competing policy objectives by permitting stabilisation, but only for a defined set of circumstances and within a defined time window.
Importantly, the Regulations are not a general framework for all stabilisation activities. They are bespoke: they define “Notes” as a particular tranche of 5-year US dollar fixed rate notes issued by Hyundai Capital Services, Inc., and they define “stabilising action” as stabilisation activity undertaken by UBS AG (and its related corporations). The exemption is therefore limited in both subject matter and permitted actors.
What Are the Key Provisions?
Section 1 (Citation and commencement) provides the short title and states that the Regulations came into operation on 23 November 2005. This matters for practitioners because the exemption only applies to stabilising actions taken within the statutory time period measured from the “date of issue of the Notes”, but the legal instrument itself must be in force for the exemption to be relied upon.
Section 2 (Definitions) is central to the scope of the exemption. It defines three key terms:
- “Notes” means the 5-year US$ fixed rate notes due November 2010 issued by Hyundai Capital Services, Inc. for a principal amount of up to US$500 million.
- “securities” has the same meaning as in section 239(1) of the SFA. This cross-reference ensures that the exemption operates within the SFA’s broader definitional architecture.
- “stabilising action” means an action taken in Singapore or elsewhere by UBS AG (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.
From a compliance perspective, the definition is both actor-specific (UBS AG and related corporations) and conduct-specific (buying, offering to buy, or agreeing to buy). It does not expressly cover other stabilisation techniques (for example, short-selling, bids without an intention to buy, or other derivative-based strategies) unless they fall within the defined “buy/offer/agree to buy” formulation.
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 of the Notes, 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, 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.
Practitioners should note the structure of the exemption:
- Time-limited: only stabilising actions within 30 days from the date of issue are exempt.
- Counterparty-limited: the exemption is conditioned on the identity and status of the person on the other side of the stabilising transaction.
- Transaction value threshold: for principal acquisitions by persons not otherwise captured as institutional investors or relevant persons, there is a minimum consideration of $200,000 per transaction.
In practical terms, the exemption is designed to permit stabilisation in a controlled manner, focusing on sophisticated or high-value counterparties and limiting the risk of retail-market distortion. The $200,000 threshold also functions as a gatekeeping mechanism to reduce the likelihood that stabilisation interacts with small-lot trading that could be more susceptible to manipulation concerns.
How Is This Legislation Structured?
The Regulations are concise and consist of a small number of provisions:
- Section 1 sets out the citation and commencement date.
- Section 2 provides definitions that determine the scope of “Notes”, “securities”, and “stabilising action”.
- Section 3 creates the exemption from specified SFA provisions (sections 197 and 198) for stabilising actions meeting the defined criteria, including the 30-day limit and the counterparty conditions.
There are no additional parts or schedules in the extract provided, reflecting the Regulations’ purpose as a targeted exemption instrument rather than a comprehensive regulatory code.
Who Does This Legislation Apply To?
The exemption is relevant primarily to parties involved in the issuance and market trading of the specified Notes—particularly UBS AG and its related corporations, because the definition of “stabilising action” is limited to actions taken by those entities. If a different dealer or arranger undertakes stabilisation activities, the exemption may not apply unless the activity falls within the defined “stabilising action” parameters.
In addition, the exemption is conditioned on the counterparty to the stabilising transactions. Stabilising action must be taken with an institutional investor, a relevant person (as defined in the SFA), or a principal acquirer meeting the $200,000 per transaction consideration threshold. Accordingly, compliance teams must ensure that counterparties are correctly classified and that transaction documentation supports the eligibility conditions.
Why Is This Legislation Important?
This Regulations matters because it provides legal certainty for stabilisation activities in a specific offering context. Without an exemption, stabilisation conduct could potentially trigger prohibitions under the SFA’s market conduct regime. By explicitly disapplying sections 197 and 198 for qualifying stabilising action, the Regulations reduce regulatory ambiguity and allow market participants to structure stabilisation programmes in a compliant way.
From a practitioner’s standpoint, the most important compliance implications are the tight scoping and evidentiary requirements implied by the conditions:
- Scope of Notes: the exemption is limited to the defined Hyundai Capital Services notes (5-year US$ fixed rate due November 2010, up to US$500 million).
- Scope of stabiliser: only UBS AG and its related corporations are within the definition of stabilising action.
- Scope of time: stabilising action must occur within 30 days from the date of issue.
- Scope of counterparties: eligibility depends on whether the counterparty is an institutional investor, a relevant person, or a principal acquirer meeting the $200,000 threshold.
Enforcement risk therefore concentrates on whether the stabilisation activity is properly documented and whether the counterparty and transaction value conditions are satisfied. For lawyers advising issuers, underwriters, or dealers, this typically requires careful review of offering documentation, stabilisation notices (where applicable), trade confirmations, and internal records demonstrating counterpart classification and transaction consideration.
Related Legislation
- Securities and Futures Act (Cap. 289) — in particular, sections 197 and 198 (market conduct provisions referenced for exemption), section 239(1) (definition of “securities”), section 275(2) (definition of “relevant person”), and section 337(1) (authorising power).
- Futures Act (as referenced in the provided metadata context).
- Stabilising Act (as referenced in the provided metadata context).
- Timeline (as referenced in the provided metadata context for version checking).
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 2005 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the official text for authoritative provisions.