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
- Type: Subsidiary Legislation (SL)
- Authorising Act: Securities and Futures Act (Cap. 289), specifically section 337(1)
- Commencement: 17 December 2004
- Legislation Number: SL 755/2004
- Status: Current version as at 27 March 2026 (per the legislation record)
- Key Provisions: Section 2 (definitions); Section 3 (exemption)
- Regulatory Focus: Exemption from market conduct prohibitions for stabilising actions relating 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. 50) Regulations 2004 (“Stabilising Action Exemption Regulations”) is a targeted set of subsidiary legislation made under the Securities and Futures Act (SFA). In plain terms, it creates a narrow exemption that allows certain market participants to take “stabilising action” in relation to a specific issuance of notes, without breaching particular market conduct provisions in the SFA.
At its core, the Regulations address a common tension in securities markets: stabilisation practices can support orderly trading and reduce volatility around the launch of a new issue, but they can also raise concerns about market manipulation or misleading conduct. The SFA contains prohibitions designed to prevent improper conduct. This Regulations carves out an exception—only for stabilising actions that meet strict conditions, including timing and the identity of the relevant investors or counterparties.
Importantly, the exemption is not general. It is tied to a defined set of “Notes” (a particular 10-year guaranteed fixed rate notes issuance by PCI Capital Limited, guaranteed by Pacific Century Insurance Company Limited) and to stabilising actions taken by a particular stabiliser group (Lehman Brothers International (Europe) and related corporations). The exemption applies only within a limited window after issuance—30 days from the date of issue.
What Are the Key Provisions?
Section 1: Citation and commencement provides the short title and states that the Regulations come into operation on 17 December 2004. For practitioners, this matters for determining whether stabilising conduct occurred within the legal framework and for aligning compliance timelines with the SFA’s market conduct regime.
Section 2: Definitions is central because it determines the scope of the exemption. Two defined terms do the work:
(1) “Notes” are defined very specifically as the 10-year guaranteed fixed rate notes due December 2014 issued by PCI Capital Limited for up to US$125 million, guaranteed by Pacific Century Insurance Company Limited. This means the exemption cannot be invoked for other notes, other issuers, different maturities, or non-guaranteed instruments, even if they are similar in nature.
(2) “Stabilising action” is defined as an action taken in Singapore or elsewhere by Lehman Brothers International (Europe) or any of its related corporations. The action must involve buying or offering or agreeing to buy the Notes with the purpose of stabilising or maintaining the market price of the Notes in Singapore or elsewhere. This definition is both functional (it must be intended to stabilise/maintain price) and actor-based (it must be taken by the specified stabiliser group).
Section 3: Exemption is the operative provision. It states that Sections 197 and 198 of the Act shall not apply to stabilising action taken in respect of any of the Notes, within 30 days from the date of issue, provided that the stabilising action is carried out with a qualifying counterparty.
The exemption is conditional. It applies only where the stabilising action is taken with 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.
For legal practitioners, the practical takeaway is that the stabiliser cannot simply trade with any market participant and claim the exemption. The counterparty must fall within the SFA’s specified categories. While the text provided does not reproduce sections 274 and 275(2), the structure indicates that the SFA distinguishes between retail and professional/sophisticated participants for market conduct purposes. The exemption therefore aligns stabilisation activity with a higher threshold of investor sophistication or with persons already captured by section 274.
Finally, the timing requirement—within 30 days from the date of issue—is a hard boundary. Stabilising action outside that window would not benefit from this exemption and could expose the stabiliser to the prohibitions in sections 197 and 198, depending on the facts and the SFA’s interpretation of those provisions.
How Is This Legislation Structured?
The Regulations are short and consist of an enacting formula and three substantive sections:
- Section 1 (Citation and commencement): identifies the instrument and its effective date.
- Section 2 (Definitions): defines “Notes” and “stabilising action” to delimit the exemption’s subject matter and permitted actor.
- Section 3 (Exemption): sets out the exemption from the SFA’s market conduct provisions (sections 197 and 198), including the 30-day limit and the counterparty conditions (section 274 persons or sophisticated investors under section 275(2)).
There are no additional parts or schedules in the extract, reflecting the Regulations’ purpose as a narrow, issuance-specific regulatory instrument rather than a comprehensive market conduct framework.
Who Does This Legislation Apply To?
Although the Regulations are made under the SFA and relate to market conduct, their application is limited by the definitions. The exemption is available only for stabilising actions taken by Lehman Brothers International (Europe) or its related corporations. Therefore, the primary regulated party is the stabiliser group identified in section 2.
However, the exemption also depends on the identity of the counterparty to the stabilising action. The stabilising action must be taken with either a person within section 274 or with a sophisticated investor under section 275(2). Accordingly, the Regulations indirectly impose compliance obligations on the stabiliser to ensure that counterparties meet the statutory criteria—through due diligence on investor status and documentation of eligibility.
Why Is This Legislation Important?
This Regulations is important because it demonstrates how Singapore’s market conduct regime can accommodate legitimate market practices while preserving investor protection. Stabilisation can be a lawful and regulated technique in primary and secondary markets, but it must be carefully bounded to avoid manipulation. By exempting stabilising action from specific SFA prohibitions, the Regulations provide legal certainty for stabilisers—so long as they comply with the narrow conditions.
From a practitioner’s perspective, the key legal significance lies in the interaction between the exemption and the SFA prohibitions. Sections 197 and 198 of the SFA are not reproduced here, but the Regulations clearly indicate that those sections would otherwise apply to stabilising action. The exemption therefore functions as a defence or carve-out. In disputes or regulatory investigations, the stabiliser’s ability to show that all conditions were met—correct notes, correct stabiliser, correct timing, and correct counterparty category—will likely be decisive.
Practically, the Regulations also highlight compliance design: because the exemption is issuance-specific and actor-specific, firms should implement controls that (i) identify whether the instrument is within the defined “Notes” description, (ii) track the issuance date to ensure the 30-day window is respected, (iii) confirm that the stabilising activity is performed by the permitted entity/entities, and (iv) verify that counterparties are sophisticated investors or persons captured by section 274. Failure on any one element could remove the exemption and increase regulatory and litigation risk.
Related Legislation
- Securities and Futures Act (Cap. 289): Sections 197, 198, 274, 275(2), and the regulation-making power in section 337(1)
- Futures Act (as referenced in the provided metadata timeline)
- Stabilising Act (as referenced in the provided metadata timeline)
- Timeline / 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.