Statute Details
- Title: Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Notes) (No. 5) Regulations 2004
- Act Code: SFA2001-S99-2004
- Type: Subsidiary Legislation (sl)
- Authorising Act: Securities and Futures Act (Cap. 289)
- Enacting Power: Section 337(1) of the Securities and Futures Act
- Citation: S 99/2004
- Commencement: 4 March 2004
- Status: Current version as at 27 March 2026
- Key Provisions: Section 1 (citation and commencement); Section 2 (definitions); Section 3 (exemption)
- Regulatory Focus: Exemption from market conduct prohibitions for “stabilising action” in relation 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. 5) Regulations 2004 (“the Regulations”) is a targeted regulatory instrument. In essence, it creates a narrow exemption from certain market conduct rules in the Securities and Futures Act (the “SFA”) for stabilising activities carried out in connection with a particular issuance of fixed rate notes.
Stabilising action is a common feature of securities issuance. Market makers or lead managers may buy (or offer to buy) securities shortly after issuance to help maintain an orderly market and reduce price volatility. However, stabilising conduct can overlap with statutory prohibitions against market manipulation or improper dealing. The Regulations therefore carve out a controlled exception, allowing stabilisation while limiting the circumstances in which it may occur.
Importantly, the exemption is not general. It applies only to stabilising action carried out in respect of a specific class of notes—fixed rate notes due March 2009 issued by Industrial Development Bank of India (up to US$300 million)—and only when stabilisation is undertaken by specified financial institutions (or their related corporations). The exemption also contains a time limit: stabilising action cannot be carried out after the expiry of 30 calendar days from the date of issuance.
What Are the Key Provisions?
1. Citation and commencement (Section 1)
Section 1 provides the formal citation and states that the Regulations come into operation on 4 March 2004. For practitioners, this matters when assessing whether a stabilising activity occurred within the regulatory framework and whether the exemption was available at the relevant time.
2. Definitions (Section 2)
Section 2 sets the boundaries of the exemption through two core definitions:
- “Notes” are defined as the fixed rate notes due March 2009 issued by Industrial Development Bank of India for a principal amount of up to US$300 million.
- “Stabilising action” is defined as an action taken in Singapore or elsewhere by Citigroup Global Markets Inc., J.P. Morgan Securities Ltd., or any of their 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.
These definitions are crucial. They limit the exemption to (i) the specified notes, (ii) stabilising conduct aimed at market price maintenance, and (iii) stabilisation performed by the named institutions (or their related corporations). If a different issuer, different instrument, or different intermediary is involved, the exemption may not apply.
3. The exemption from sections 197 and 198 of the SFA (Section 3(1))
Section 3(1) is the operative provision. It states that, subject to paragraph (2), sections 197 and 198 of the Act shall not apply to stabilising action carried out in respect of any of the Notes with respect to dealings involving either:
- a person referred to in section 274 of the Act; or
- a sophisticated investor as defined in section 275(2) of the Act.
While the extract provided does not reproduce sections 197, 198, 274, or 275, the structure indicates that the SFA contains market conduct restrictions that would otherwise capture stabilising purchases or offers. The Regulations remove that risk for stabilising action, but only where the counterparty falls within the specified categories—either a person within the section 274 group or a sophisticated investor.
Practical implication: stabilising activity is not simply “allowed” in a vacuum. The exemption is conditioned on the nature of the persons involved in the stabilising dealings. For transaction counsel, this means documentation and execution strategy should ensure that stabilising trades are conducted with eligible counterparties.
4. Time limitation (Section 3(2))
Section 3(2) imposes a clear temporal restriction: the exemption in paragraph (1) does not apply to stabilising action carried out at any time after the expiry of the period of 30 calendar days from the date of the issuance of the Notes.
This is a hard stop. Even if all other conditions are met (eligible notes, eligible stabilisers, eligible counterparties), stabilising action conducted beyond the 30-day window would fall outside the exemption and could expose the stabilising parties to the underlying prohibitions in sections 197 and 198 of the SFA.
5. Institutional scope and “where” the action occurs
The definition of stabilising action expressly includes actions taken in Singapore or elsewhere, and stabilising the market price of the Notes in Singapore or elsewhere. This is significant for cross-border issuance structures. It suggests that the exemption is intended to accommodate international stabilisation practices, even where trading occurs outside Singapore, provided the stabilising activity meets the definition and the other conditions.
How Is This Legislation Structured?
The Regulations are short and structured around three sections:
- Section 1 sets out the citation and commencement.
- Section 2 provides definitions that define the scope of “Notes” and “stabilising action”.
- Section 3 creates the exemption, specifying (i) which SFA provisions are disapplied, (ii) the categories of eligible counterparties, and (iii) the 30-calendar-day limit.
From a practitioner’s perspective, the Regulations function as a bespoke carve-out: they do not establish a comprehensive stabilisation regime. Instead, they operate as a targeted legal permission that removes specific statutory constraints for a defined transaction and defined participants, within a defined timeframe.
Who Does This Legislation Apply To?
The exemption is designed to benefit parties involved in stabilising dealings in the specified notes. The “stabilising action” definition identifies the relevant stabilisers: Citigroup Global Markets Inc., J.P. Morgan Securities Ltd., and their related corporations. Accordingly, the exemption is most relevant to these institutions and any related entities that actually carry out the stabilising purchases or offers to buy.
However, the exemption is also conditioned on the counterparty category. Section 3(1) restricts the exemption to stabilising action carried out “with” either (a) a person referred to in section 274 of the SFA or (b) a sophisticated investor under section 275(2). Therefore, even where the stabiliser is one of the named institutions, the exemption may not apply if stabilising trades are executed with counterparties outside those categories.
In practice, this means lawyers should coordinate with the issuance team and trading desks to confirm (i) the identity and status of counterparties, (ii) the timing of stabilising activity, and (iii) that the notes being traded are indeed the defined “Notes” (fixed rate notes due March 2009 by Industrial Development Bank of India, up to US$300 million).
Why Is This Legislation Important?
This Regulations matters because it addresses a recurring tension in securities markets: stabilisation can support orderly trading, but it can also resemble conduct that market conduct laws are designed to prevent. By disapplying sections 197 and 198 of the SFA for qualifying stabilising action, the Regulations provide legal certainty for market participants involved in the specified issuance.
For practitioners, the key value is the precision of the exemption. It is not a blanket permission to stabilise any security at any time. Instead, it is a controlled exception with three gating elements: (1) the instrument (“Notes”), (2) the stabiliser (named institutions and related corporations), and (3) the counterparty category (section 274 persons or sophisticated investors), plus a strict 30-day limit. This structure makes compliance and audit trails essential.
From an enforcement perspective, the time limit is particularly important. If stabilisation continues beyond the 30-calendar-day period, the exemption no longer applies, and the underlying statutory prohibitions could be triggered. Counsel should therefore ensure that stabilisation programs include operational controls to stop stabilising trades after the expiry date and to document the issuance date used to calculate the 30-day period.
Related Legislation
- Securities and Futures Act (Cap. 289) — including sections 197, 198, 274, 275(2), and the authorising provision in section 337(1)
- Futures Act (as referenced in the legislation metadata)
- Stabilising Act (as referenced in the legislation metadata)
- Timeline (legislation timeline reference for version control)
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. 5) Regulations 2004 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the official text for authoritative provisions.