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
- Legislative Citation: SL 730/2005
- Commencement: 23 November 2005
- Status: Current version as at 27 March 2026 (per provided extract)
- Key Provisions: Section 1 (Citation and commencement); 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 2005 (“Stabilising Action Exemption Regulations”) is a targeted regulatory instrument that creates a narrow exemption from certain market conduct rules in the Securities and Futures Act (the “SFA”). In practical terms, it allows specified parties to take “stabilising action” in relation to a particular tranche of notes during a defined period after issuance—without triggering the prohibitions that would otherwise apply.
Stabilising action is a common feature of capital markets transactions. When new debt securities are issued, market makers or arrangers may buy (or offer to buy) the securities shortly after issuance to support liquidity and prevent disorderly price movements. However, market conduct regimes typically treat such activity with caution because it can resemble market manipulation. This legislation resolves that tension by carving out a permitted pathway, but only if strict conditions are met.
Importantly, the exemption is not general. It is expressly tied to a specific product: “Notes” defined as 5-year US$ fixed rate notes due November 2010 issued by Hyundai Capital Services, Inc., up to a principal amount of US$500 million. It is also tied to a specific stabiliser: UBS AG (and its related corporations). The exemption applies only within 30 days from the date of issue of the notes and only for certain categories of counterparties or acquisition structures.
What Are the Key Provisions?
Section 1 (Citation and commencement) provides the formal citation and sets the commencement date. The Regulations “shall come into operation on 23rd November 2005.” For practitioners, this matters because the exemption is time-bound and transaction-specific; the legal availability of the exemption depends on the Regulations being in force at the relevant time.
Section 2 (Definitions) is the backbone of the Regulations. It defines three key concepts:
- “Notes” are precisely identified: 5-year US$ fixed rate notes due November 2010 issued by Hyundai Capital Services, Inc., up to US$500 million.
- “securities” adopts the meaning in section 239(1) of the SFA, ensuring that the exemption operates within the SFA’s definitional framework.
- “stabilising action” is defined as 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.
This definition is significant because it limits the exemption to stabilising conduct by UBS AG and its related corporations. It also clarifies that stabilising action can occur outside Singapore (“in Singapore or elsewhere”), which is relevant for cross-border issuance and trading.
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 the Notes within 30 days from the date of issue, provided the stabilising action is undertaken with certain categories of persons or acquisition thresholds.
While the extract does not reproduce the text of sections 197 and 198, the structure indicates that those sections contain prohibitions or restrictions on market conduct—likely including requirements or bans that would otherwise treat certain trading or offers to trade as potentially improper. The exemption therefore functions as a “safe harbour” for stabilising activity, but only within the defined parameters.
Section 3 then sets out the permitted counterparties/conditions in three limbs:
- (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
For legal practice, the key takeaway is that the exemption is not simply “UBS can stabilise.” It is “UBS (and related corporations) can stabilise the Notes within 30 days, but the stabilising transactions must be with (or structured through) qualifying counterparties or meet the minimum consideration threshold.” This is a classic example of a regulatory design that balances market integrity with transactional flexibility.
Finally, the Regulations include a “Made” date and signature: “HENG SWEE KEAT, Managing Director, Monetary Authority of Singapore.” This confirms the instrument’s formal enactment by the Monetary Authority of Singapore (MAS) under the SFA’s enabling power.
How Is This Legislation Structured?
The Regulations are short and structured as a three-section instrument:
- Section 1 sets out the citation and commencement.
- Section 2 provides definitions that precisely identify the Notes, the meaning of “securities” by reference to the SFA, and the scope of “stabilising action” (including who may act and where).
- Section 3 contains the exemption from specified SFA provisions, including the time window (30 days), the product scope (the defined Notes), the actor scope (UBS AG and related corporations), and the counterparty/consideration conditions.
There are no additional parts or schedules in the extract, reflecting the Regulations’ purpose as a transaction-specific exemption rather than a broad policy framework.
Who Does This Legislation Apply To?
The exemption is directed at the conduct of UBS AG and its related corporations when they take “stabilising action” in relation to the defined Hyundai Capital Services notes. The Regulations therefore primarily affect the arranger/market participant responsible for stabilisation, as well as any counterparties involved in stabilising transactions.
However, the exemption also indirectly governs counterparties because Section 3 limits the exemption to stabilising action taken with institutional investors, relevant persons (within the SFA’s definition), or principal acquirers meeting a minimum consideration threshold of $200,000 per transaction (or equivalent). Accordingly, parties structuring trades around stabilisation must ensure that the counterparty category and transaction economics fall within the permitted parameters.
Why Is This Legislation Important?
For practitioners, the significance of this legislation lies in its role as a transaction-specific safe harbour within Singapore’s market conduct regime. Stabilising activity can be commercially necessary to support orderly trading after issuance, but it can also raise regulatory concerns if it is indistinguishable from manipulative trading. By exempting stabilising action from sections 197 and 198 of the SFA (within strict limits), the Regulations reduce legal uncertainty for market participants.
Second, the Regulations demonstrate how Singapore’s market conduct framework can be implemented through targeted subsidiary legislation. Rather than amending the SFA broadly, MAS uses a narrow exemption instrument tied to a particular issuance and stabiliser. This approach is useful when regulators want to permit stabilisation for a specific deal while maintaining tighter controls for other issuances or actors.
Third, the conditions in Section 3 are practical compliance checkpoints. Lawyers advising on stabilisation programmes should focus on: (i) whether the instrument being traded is the exact “Notes” defined; (ii) whether the stabilising action is taken by UBS AG or related corporations; (iii) whether the activity occurs within the 30-day window from the date of issue; and (iv) whether each stabilising transaction is with an institutional investor, a relevant person, or a principal acquirer meeting the $200,000 minimum consideration threshold (including non-cash consideration via exchange of securities or other assets).
In enforcement terms, the exemption is likely to be scrutinised. If stabilisation is conducted outside the defined window, with non-qualifying counterparties, or in respect of notes that do not match the definition, the exemption would not apply and the underlying prohibitions in sections 197 and 198 could become relevant.
Related Legislation
- Securities and Futures Act (Cap. 289) — including sections 197, 198, 239(1), 275(2), and the enabling power in section 337(1)
- Futures Act (as referenced in the provided metadata)
- Stabilising Act (as referenced in the provided metadata)
- Timeline (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 2005 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the official text for authoritative provisions.