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)
- Authorising Power: Section 337(1) of the Securities and Futures Act
- Commencement: 17 December 2004
- Legislation Number: SL 755/2004
- Status (as provided): Current version as at 27 March 2026
- Key Provisions: Section 2 (definitions); Section 3 (exemption)
- Primary Exempted Provisions: Sections 197 and 198 of the Securities and Futures Act
- Stabilising Party (defined): Lehman Brothers International (Europe) and related corporations
- Instrument (defined): “Notes” — 10-year guaranteed fixed rate notes due December 2014 issued by PCI Capital Limited, guaranteed by Pacific Century Insurance Company Limited
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 legal “safe harbour” that allows certain market participants to take stabilising actions in relation to a specified bond/notes issuance without falling foul of particular market conduct prohibitions in the SFA.
Stabilisation is a practice commonly used around the issuance of securities. The issuer, underwriter, or a designated financial institution may buy (or offer to buy) the relevant securities in the market to help maintain orderly trading and reduce excessive volatility immediately after issuance. However, stabilisation can overlap with conduct that market regulators treat as potentially manipulative or unfair—hence the need for carefully drafted exemptions.
This Regulations’ scope is deliberately limited: it applies only to (i) a specific set of “Notes” (defined by issuer, maturity, principal cap, and guarantee), (ii) stabilising actions taken by a specific stabilising entity (Lehman Brothers International (Europe) and its related corporations), and (iii) a defined time window (within 30 days from the date of issue). It also conditions the exemption on the stabilising counterparty being within specified categories of persons under the SFA (or being a sophisticated investor).
What Are the Key Provisions?
Section 1 (Citation and commencement) provides the short title and confirms that the Regulations came into operation on 17 December 2004. For practitioners, this matters mainly for determining whether conduct occurred within the legal framework at the relevant time.
Section 2 (Definitions) is central because the exemption turns entirely on the defined terms. Two definitions are provided:
- “Notes” are defined 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 definition is highly specific and effectively “locks” the exemption to that particular issuance.
- “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 broad enough to include not only actual purchases but also offers or agreements to buy.
Section 3 (Exemption) provides the operative relief. It states that Sections 197 and 198 of the SFA shall not apply to any stabilising action taken in respect of any of the Notes within 30 days from the date of issue, provided 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.
Although the extract does not reproduce Sections 197 and 198, the practical effect is clear: the Regulations carve out stabilising conduct from the prohibitions that would otherwise apply. The exemption is not blanket; it is conditional on both timing and counterparty category. For a lawyer advising on compliance, the key questions become:
- Was the conduct undertaken within 30 days from the date of issue of the Notes?
- Was the conduct truly a stabilising action as defined (i.e., buying or offering/agreement to buy to stabilise or maintain market price)?
- Was the stabilising action taken with a counterparty that falls within section 274 persons or within the definition of a sophisticated investor under section 275(2)?
In addition, the definition of stabilising action expressly covers actions taken in Singapore or elsewhere. This is important for cross-border issuance and trading: even if the stabilising activity occurs outside Singapore, the exemption may still be relevant so long as the stabilising action is within the defined scope and the other conditions are satisfied.
How Is This Legislation Structured?
The Regulations are short and structured around a conventional subsidiary-legislation format:
- Part/Section 1: Enacting formula elements—citation and commencement.
- Section 2: Definitions—defining “Notes” and “stabilising action” to precisely delimit the exemption.
- Section 3: Exemption—the operative provision stating that specified SFA sections do not apply to stabilising actions in respect of the defined Notes, within a specified period, and with specified categories of counterparties.
There are no additional parts or complex procedural requirements in the extract provided. The legal work therefore focuses on interpreting the definitions and ensuring the factual matrix fits within the exemption.
Who Does This Legislation Apply To?
In practical terms, the exemption is directed at the entities performing stabilising actions and the counterparties with whom those actions are conducted. The stabilising action must be taken by Lehman Brothers International (Europe) or its related corporations, as those are the only entities captured by the definition of “stabilising action”.
However, the exemption also depends on the counterparty. The stabilising action must be taken with either a person referred to in section 274 of the SFA or with a sophisticated investor under section 275(2). Accordingly, even if the stabilising entity is within the definition, the exemption will not apply if the stabilising trades are conducted with counterparties outside those categories.
Why Is This Legislation Important?
This Regulations matters because it demonstrates how Singapore’s market conduct regime balances two competing policy goals: (1) preventing market manipulation and unfair trading practices, and (2) permitting legitimate market stabilisation around securities issuance. By exempting stabilising actions from specific SFA prohibitions, the Regulations enable underwriting and distribution processes to function smoothly while still maintaining regulatory boundaries.
For practitioners, the most significant legal value lies in the precision of the exemption. It is not a general stabilisation licence. It is an issuance-specific and conduct-specific carve-out. That means compliance advice must be evidence-driven: counsel should verify the instrument details (issuer, guarantee, maturity, principal cap), the identity of the stabilising entity, the timing of trades, and the counterparty classification.
From an enforcement perspective, the conditional nature of the exemption reduces ambiguity. If a stabilising trade falls outside the 30-day window, involves a different instrument, is undertaken by a different entity not captured by the definition, or is executed with a counterparty not within sections 274 or the sophisticated investor definition, then the exemption would likely not apply—leaving the conduct exposed to the underlying prohibitions in Sections 197 and 198 of the SFA.
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. 50) Regulations 2004 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the official text for authoritative provisions.