Statute Details
- Title: Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Notes) (No. 50) Regulations 2004
- Act Code: SFA2001-S755-2004
- Legislation Type: Subsidiary legislation (SL)
- Authorising Act: Securities and Futures Act (Cap. 289) (“SFA”)
- Enacting Authority: Monetary Authority of Singapore (MAS)
- Enacting Power: Section 337(1) of the Securities and Futures Act
- Citation: SL 755/2004
- Commencement: 17 December 2004
- Status: Current version as at 27 March 2026 (per legislation database display)
- 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. 50) Regulations 2004 is a targeted regulatory instrument that creates a narrow exemption from certain market conduct rules in the Securities and Futures Act. In plain terms, it allows specified parties to take “stabilising action” in relation to a particular issuance of notes during a defined period, without triggering the prohibitions contained in the Act.
The legislation is not a general framework for all securities offerings. Instead, it is designed for a specific set of circumstances: the issuance of 10-year guaranteed fixed rate notes due December 2014 by PCI Capital Limited (up to US$125 million), guaranteed by Pacific Century Insurance Company Limited. The exemption is time-bound and purpose-limited, reflecting the regulatory balance between (i) preventing improper market manipulation and (ii) permitting legitimate market stabilisation practices commonly used in capital markets to support orderly trading after issuance.
Accordingly, the Regulations operate as a carve-out to the Act’s market conduct provisions (specifically sections 197 and 198 of the SFA). They define what counts as “stabilising action” and restrict the exemption to stabilising activity undertaken within 30 days from the date of issue, by persons falling within the Act’s categories (including certain regulated persons) or by sophisticated investors.
What Are the Key Provisions?
1. Citation and commencement (Section 1)
Section 1 provides the short title and states that the Regulations come into operation on 17 December 2004. For practitioners, this matters because the exemption’s availability is linked to the issuance timeline and the regulatory regime applicable at the time stabilisation is undertaken.
2. Definitions (Section 2)
Section 2 is central because it tightly constrains the scope of the exemption. It defines two key terms:
- “Notes” are specifically identified as the “10-year guaranteed fixed rate notes due December 2014” issued by PCI Capital Limited for a principal amount of up to US$125 million, guaranteed by Pacific Century Insurance Company Limited. This is a bespoke definition—only these notes qualify.
- “stabilising action” means an action taken in Singapore or elsewhere by Lehman Brothers International (Europe) (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.
The definition is notable for two reasons. First, it identifies the stabilising actor: Lehman Brothers International (Europe) and its related corporations. Second, it defines the permitted conduct as buying (or offering/agreeing to buy) for stabilisation/price maintenance purposes. This is consistent with the concept of market stabilisation, but the Regulations still require compliance with the conditions in Section 3.
3. The exemption from sections 197 and 198 of the Act (Section 3)
Section 3 is the operative provision. It states that sections 197 and 198 of the Securities and Futures Act shall not apply to stabilising action taken in respect of any of the Notes, within 30 days from the date of issue, with respect to stabilising action undertaken by either:
- (a) a person referred to in section 274 of the Act; or
- (b) 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(2), the structure indicates the following practical effect: the Act’s general market conduct prohibitions (likely including restrictions on certain trading or market manipulation conduct) are suspended for the specified stabilisation activity, but only when the stabilising actor falls within the enumerated categories and the activity occurs within the specified 30-day window.
Time limitation and conduct limitation
The exemption is explicitly time-bound: stabilising action must be taken “within 30 days from the date of issue of the Notes.” This is a key compliance point. Even if the stabilising actor and the notes match the definitions, stabilisation outside the 30-day period would not benefit from this exemption and could expose the actor to the underlying prohibitions in sections 197 and 198.
Geographical element
The definition of stabilising action includes actions taken “in Singapore or elsewhere” to stabilise or maintain the market price of the Notes in Singapore or elsewhere. This matters for cross-border trading desks and execution venues. Practitioners should assume that the exemption contemplates global execution and not merely local trading, provided the action fits the defined stabilising purpose and actor.
How Is This Legislation Structured?
The Regulations are structured in a straightforward, minimalist format typical of targeted exemptions:
- Section 1 (Citation and commencement) sets the legal identity of the instrument and its effective date.
- Section 2 (Definitions) provides the bespoke scope—what “Notes” are covered and what constitutes “stabilising action.”
- Section 3 (Exemption) applies the exemption to stabilising action in respect of the defined Notes, within the defined period, and by specified categories of persons (section 274 persons or sophisticated investors under section 275(2)).
There are no additional parts or complex schedules in the extract. The legal effect is therefore concentrated in Section 3, with Section 2 doing the essential “gatekeeping” work.
Who Does This Legislation Apply To?
Although the Regulations are made under the Securities and Futures Act, their practical application is narrower than the Act itself. The exemption is relevant to parties involved in stabilising the market price of the specified Notes. The definition of “stabilising action” identifies the stabilising actor as Lehman Brothers International (Europe) or its related corporations. That said, Section 3 also requires that the stabilising action be taken by a person falling within section 274 of the Act or by a sophisticated investor under section 275(2).
In practice, this means that the exemption is not automatically available to any participant in the Notes’ trading ecosystem. It is conditional on the stabilising actor’s legal status under the SFA framework and on the stabilisation being undertaken within the 30-day post-issuance window. Lawyers advising issuers, lead managers, trading desks, or compliance teams should therefore map the relevant entity’s regulatory classification and investor status against the cross-references in Section 3.
Why Is This Legislation Important?
This Regulations is important because it illustrates how Singapore’s market conduct regime can accommodate legitimate market stabilisation while preserving the integrity of trading. Sections 197 and 198 of the Securities and Futures Act likely contain prohibitions designed to prevent market manipulation and improper trading practices. Without an exemption, stabilisation activities—particularly those involving buying or offers to buy—could be argued to fall within prohibited conduct.
By carving out stabilising action for a specific notes issuance, the Regulations provides legal certainty to the stabilising actor and reduces compliance risk. For practitioners, the key value is not only that an exemption exists, but that it is precisely bounded by:
- the identity of the Notes (a bespoke definition tied to a particular issuer, instrument, and guarantee);
- the identity of the stabilising actor (Lehman Brothers International (Europe) and related corporations);
- the purpose (stabilise or maintain market price);
- the timing (within 30 days from the date of issue); and
- the category of persons (section 274 persons or sophisticated investors under section 275(2)).
From an enforcement and compliance perspective, the time limitation is particularly significant. Stabilisation is often operationally planned around the issuance and early trading period. A compliance failure—such as continuing stabilisation beyond the 30-day window—could remove the protection of the exemption and expose the actor to the underlying statutory prohibitions.
Finally, the Regulations demonstrate a broader regulatory approach: MAS can grant targeted exemptions using its powers under section 337(1) of the SFA. For lawyers advising on future issuances, this is a useful precedent for understanding how exemptions may be structured—narrowly, instrument-specific, and condition-driven.
Related Legislation
- Securities and Futures Act (Cap. 289) — in particular sections 197, 198, 274, 275(2), and the exemption-making power in section 337(1)
- Futures Act (as referenced in the platform’s metadata)
- Stabilising Act (as referenced in the platform’s 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. 50) Regulations 2004 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the official text for authoritative provisions.