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 (SFA), specifically section 337(1)
- Legislative Status: Current version (as at 27 Mar 2026)
- Singapore Legal Citation: SL 99/2004
- Commencement: 4 March 2004
- Key Provisions: Section 1 (Citation and commencement); Section 2 (Definitions); Section 3 (Exemption)
- Primary Legal Effect: Exempts certain stabilising actions in relation to specified “Notes” from the operation of sections 197 and 198 of the Securities and Futures Act, subject to conditions
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 is a targeted regulatory instrument. In plain terms, it allows certain market participants to carry out “stabilising actions” in connection with a particular issuance of fixed rate notes—without being automatically caught by specific market conduct prohibitions in the Securities and Futures Act.
Stabilising actions are a common feature of securities issuance. They are intended to support orderly trading and reduce price volatility immediately after issuance. However, stabilisation can resemble prohibited conduct if it is not carefully bounded. This is why the SFA contains market conduct rules that generally restrict certain dealings and practices that could distort market prices or mislead investors.
This set of Regulations creates a narrow exemption for stabilising actions relating to a defined set of “Notes” (issued by Industrial Development Bank of India, due March 2009, up to US$300 million). The exemption is conditional: it applies only to stabilising actions carried out by specified persons or in relation to specified categories of investors, and it is time-limited to a maximum period after issuance.
What Are the Key Provisions?
Section 1: Citation and commencement provides the short title and the date the Regulations come into operation. The Regulations may be cited as the “Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Notes) (No. 5) Regulations 2004” and they commenced on 4 March 2004. For practitioners, this matters because any stabilising activity would need to be assessed against the law in force at the relevant time.
Section 2: Definitions is crucial because the exemption is only as broad as the defined terms. Two definitions drive the scope:
- “Notes” are defined very specifically 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.
From a compliance perspective, this definition is both restrictive and operational. It limits the exemption to stabilisation activities performed by the named entities (and their related corporations) and to actions that are directed at stabilising or maintaining the market price. It also covers not only actual purchases but also offers or agreements to buy—meaning that contractual commitments and pre-trade arrangements may need to be assessed for compliance.
Section 3: Exemption is the operative provision. It provides that, subject to paragraph (2), sections 197 and 198 of the Act shall not apply to any stabilising action carried out in respect of the defined Notes with either:
- Section 3(1)(a): a person referred to in section 274 of the Act; or
- Section 3(1)(b): a sophisticated investor as defined in section 275(2) of the Act.
Although the extract does not reproduce sections 197, 198, 274, or 275, the structure indicates that the SFA generally restricts certain dealings and market conduct practices, and that the exemption is linked to counterparties. In practice, this means that stabilising actions are exempt only when conducted with the specified categories of persons/investors. A lawyer advising on stabilisation arrangements should therefore map the counterparty identity and investor classification to the relevant SFA provisions.
Section 3(2): Time limitation imposes a hard stop. The exemption “shall not apply” to any 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 key compliance constraint. Even if the stabilising action is otherwise within the defined participants and counterparty categories, it will fall outside the exemption if performed after the 30-day window.
For practitioners, the practical question becomes: what is the “date of issuance” for the Notes, and how is the 30-calendar-day period calculated? The Regulations use calendar days (not business days), so counsel should ensure that internal compliance schedules and trading controls are aligned to the correct issuance date and that any stabilisation trades are completed (or at least not initiated) within the permitted period.
How Is This Legislation Structured?
The Regulations are structured in a straightforward three-part format:
- Section 1 (Citation and commencement): identifies the instrument and its effective date.
- Section 2 (Definitions): defines “Notes” and “stabilising action,” which are the two central scope-limiting concepts.
- Section 3 (Exemption): sets out the exemption from sections 197 and 198 of the SFA, including the counterparty conditions and the 30-calendar-day time limit.
Notably, there are no additional schedules or detailed procedural requirements in the extract provided. The legal effect is therefore primarily determined by the defined scope in section 2 and the conditions in section 3.
Who Does This Legislation Apply To?
This legislation applies to stabilising actions in relation to the specific “Notes” described in section 2. The exemption is not general-purpose; it is tied to a particular issuance (Industrial Development Bank of India fixed rate notes due March 2009, up to US$300 million). Accordingly, parties involved in other issuances cannot rely on this exemption.
In addition, the exemption is limited to stabilising actions carried out by Citigroup Global Markets Inc., J.P. Morgan Securities Ltd., or their related corporations. Even if other market makers attempt to stabilise the same Notes, the exemption would not automatically extend to them unless they fall within the “related corporations” concept as used in the definition.
Finally, the exemption is conditional on the counterparty/investor category: stabilising actions must be carried out with a person referred to in section 274 of the SFA or with a sophisticated investor under section 275(2). This means that the exemption’s availability may depend on the identity and status of the counterparty in each stabilisation transaction.
Why Is This Legislation Important?
From a market conduct perspective, the Regulations provide a controlled legal pathway for stabilisation. Without an exemption, stabilising activities could risk contravening the SFA’s prohibitions in sections 197 and 198. By carving out an exemption, the Regulations balance two policy goals: enabling legitimate stabilisation practices during an issuance period, while still preserving the integrity of the market and protecting investors from potentially manipulative conduct.
For legal practitioners, the most significant value of this instrument lies in its precision. It is not a broad permission; it is a narrowly tailored exemption that depends on: (i) the specific Notes; (ii) the specific stabilising entities (and their related corporations); (iii) the counterparty category (section 274 persons or sophisticated investors); and (iv) a strict 30-calendar-day limit from issuance. Each of these elements can become a compliance fault line if not properly documented.
In enforcement terms, the time limitation is particularly important. If stabilisation continues beyond the 30-day window, the exemption ceases to apply, and the stabilising conduct could be assessed under the general market conduct prohibitions in the SFA. Counsel advising issuers, underwriters, or stabilising agents should therefore ensure that trading desks and compliance teams have clear operational controls: monitoring of the issuance date, trade logs, counterparty classification, and evidence that stabilisation was undertaken for the purpose of stabilising or maintaining market price.
Additionally, because “stabilising action” includes offers or agreements to buy (not just executed purchases), legal review should extend to documentation and communications that may constitute an “offer” or “agreement” within the meaning of the definition. This can affect how stabilisation strategies are implemented contractually and how communications are recorded.
Related Legislation
- Securities and Futures Act (Cap. 289) — in particular sections 197, 198, 274, 275(2), and the regulation-making power in section 337(1)
- Futures Act (as referenced in the platform metadata)
- Stabilising Act (as referenced in the platform metadata)
- Legislation Timeline (for version control and amendment history)
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.