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
- Legislation Type: Subsidiary legislation (SL)
- Authorising Act: Securities and Futures Act (Cap. 289), specifically section 337(1)
- Legislative Citation: SL 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 Authority: Monetary Authority of Singapore (MAS)
- Relevant Market Conduct Provisions Exempted: Sections 197 and 198 of the Securities and Futures Act
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 (“Stabilising Action Exemption Regulations”) creates a targeted exemption from certain market conduct rules under the Securities and Futures Act (the “SFA”) for stabilising activities carried out in relation to a specific issuance of fixed rate notes by the Industrial Development Bank of India (“IDBI”). In practical terms, it permits certain market participants to take stabilising steps—such as buying, or offering to buy—without breaching the SFA provisions that would otherwise restrict such conduct.
Stabilisation is a well-known feature of securities offerings. When new notes are issued, the market price may be volatile. Under a stabilisation regime, designated persons may intervene to help maintain orderly trading and reduce extreme price fluctuations. However, stabilisation can resemble prohibited market manipulation if not carefully bounded. Accordingly, the law balances two competing objectives: (1) allowing legitimate stabilisation to support market functioning, and (2) preventing improper conduct that could mislead investors or distort prices.
This subsidiary legislation is narrow in scope. It does not create a general stabilisation exception for all securities or all issuers. Instead, it is confined to “Notes” defined in the Regulations (fixed rate notes due March 2009 issued by IDBI for up to US$300 million) and to stabilising actions taken by specified entities (Citigroup Global Markets Inc., J.P. Morgan Securities Ltd., or their related corporations). It also imposes a time limit: the exemption does not apply to stabilising actions undertaken after 30 calendar days from the date of issuance.
What Are the Key Provisions?
Section 1 (Citation and commencement) provides the formal name of the Regulations and states that they come into operation on 4 March 2004. For practitioners, commencement matters because it determines whether stabilising actions taken around the issuance period fall within the regulatory framework.
Section 2 (Definitions) is central because it defines the boundaries of the exemption. Two definitions drive the analysis:
- “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. This is a classic “named security” approach: the exemption is tethered to a particular instrument and issuance size.
- “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, the definition is not merely descriptive; it functions as a gatekeeper. If an activity does not fit within the definition—e.g., it is taken by a different entity, or it is not aimed at stabilising/maintaining the market price—then the exemption may not apply. Similarly, the definition includes actions taken outside Singapore, which is important for cross-border bookbuilding and trading arrangements.
Section 3 (Exemption) is the operative provision. It provides that, subject to paragraph (2), sections 197 and 198 of the SFA shall not apply to stabilising action carried out in respect of the Notes with respect to stabilising actions carried out:
- under paragraph (a): involving a person referred to in section 274 of the SFA; or
- under paragraph (b): involving a sophisticated investor as defined in section 275(2) of the SFA.
Although the text provided does not reproduce sections 197, 198, 274, or 275, the structure indicates that the exemption is conditional on the counterparty or category of persons involved in the stabilising transactions. In other words, stabilisation is not automatically exempt in all circumstances; it is exempt only when the stabilising action is carried out with specified categories of persons—either those falling within section 274 or those classified as sophisticated investors under section 275(2). For counsel, this means the exemption analysis must be performed transaction-by-transaction (or at least counterparty-by-counterparty), confirming the relevant status of the persons involved.
Section 3(2) (Time limitation) further restricts the exemption. Paragraph (1) “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 hard stop. Even if the stabilising action is otherwise within the definition and involves the correct categories of persons, the exemption ceases after the 30-day window.
Practically, this time limitation requires robust operational controls: recordkeeping of issuance date, monitoring of stabilisation activity dates, and ensuring that any post-window market activity is assessed under the general SFA market conduct rules rather than relying on this exemption.
How Is This Legislation Structured?
The Regulations are concise and consist of three substantive provisions:
- Section 1 sets out the citation and commencement.
- Section 2 provides definitions of “Notes” and “stabilising action”, which define the scope of the exemption.
- Section 3 contains the exemption from SFA sections 197 and 198, subject to (i) the category of persons involved and (ii) the 30-calendar-day time limit.
There are no additional parts or schedules in the extract. The legislative design is therefore “definition-led”: once the practitioner confirms that the instrument and stabilising actors match the definitions, the remaining compliance work focuses on counterparty categories and timing.
Who Does This Legislation Apply To?
The exemption is directed at stabilising actions in relation to the defined IDBI notes. It applies to stabilising actions taken by Citigroup Global Markets Inc., J.P. Morgan Securities Ltd., or their related corporations. Accordingly, the primary regulated parties are the entities conducting stabilisation and any related entities acting in the same capacity.
However, the exemption is also conditional on the persons involved in the stabilising actions. Section 3(1) limits the exemption to stabilising actions carried out with either (a) persons referred to in section 274 of the SFA or (b) sophisticated investors under section 275(2) of the SFA. Therefore, even if the stabilising actor is one of the specified firms, the exemption may not apply if the counterparty does not fall within the relevant categories.
Why Is This Legislation Important?
This Regulations matters because it provides a legally sanctioned pathway for stabilisation activity in a specific securities offering. Without such an exemption, stabilising purchases or offers to buy could potentially trigger prohibitions or compliance risk under the SFA’s market conduct framework. By carving out stabilising actions from sections 197 and 198 (subject to conditions), the Regulations reduce uncertainty for arrangers and dealers and help ensure that legitimate stabilisation can occur within a defined legal perimeter.
From a practitioner’s standpoint, the key value lies in the precision of the exemption. It is not a blanket permission. Instead, it is constrained by: (1) the specific notes (IDBI fixed rate notes due March 2009, up to US$300 million), (2) the specific stabilising actors (Citigroup Global Markets Inc., J.P. Morgan Securities Ltd., and related corporations), (3) the counterparty categories (section 274 persons or sophisticated investors), and (4) a strict 30-calendar-day limit from issuance.
Enforcement and compliance implications follow directly. MAS and market participants typically expect stabilisation to be documented, time-bound, and conducted in a manner consistent with the exemption’s conditions. Counsel advising on offering documentation, dealer arrangements, and post-issuance trading strategies should therefore treat this Regulations as a compliance checklist: confirm the instrument, confirm the stabilising firm, confirm the counterparty classification, and confirm that the activity falls within the 30-day window.
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 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. 5) Regulations 2004 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the official text for authoritative provisions.