Statute Details
- Title: Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Notes) (No. 50) Regulations 2005
- Act Code: SFA2001-S731-2005
- Type: Subsidiary Legislation (SL)
- Authorising Act: Securities and Futures Act (Cap. 289)
- Enacting power: Section 337(1) of the Securities and Futures Act
- Commencement: 23 November 2005
- Key provisions: Section 2 (definitions); Section 3 (exemption)
- Regulatory status (as provided): Current version as at 27 March 2026
- Legislative instrument number: SL 731/2005
What Is This Legislation About?
The Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Notes) (No. 50) Regulations 2005 (“the Regulations”) is a targeted regulatory instrument that creates a narrow exemption from market conduct rules in the Securities and Futures Act (the “SFA”) for certain stabilising activities relating to a specific bond issuance.
In plain terms, the Regulations recognise that, in some capital markets transactions, market participants may undertake “stabilising action” to support the trading price of newly issued securities during an initial period after issuance. Such actions can be controversial because they may resemble improper market manipulation. The SFA therefore contains prohibitions and restrictions on conduct that could distort market prices. This subsidiary legislation carves out an exemption for stabilising action in respect of a particular set of “Notes” issued by a named issuer, subject to strict conditions.
Importantly, the exemption is not general. It is tied to (i) the specific Notes described in the Regulations; (ii) a defined stabiliser (UBS AG and related corporations); and (iii) a limited time window (within 30 days from the date of issue). It also applies only when the stabilising action is undertaken for certain categories of counterparties or investors, including institutional investors and certain high-value principal acquisitions.
What Are the Key Provisions?
Section 1: Citation and commencement provides the short title and states that the Regulations come into operation on 23 November 2005. This matters for compliance timing: any stabilising action intended to rely on the exemption must fall within the regulatory framework effective from that date.
Section 2: Definitions is central because the exemption turns on precise definitions. The Regulations define “Notes” as the 5-year floating rate notes due November 2010 issued by The Export-Import Bank of Korea for a principal amount of up to US$500 million. This is a classic example of a “bespoke” exemption: it is anchored to a particular instrument rather than a class of securities.
Section 2 also defines “stabilising action” as an action taken in Singapore or elsewhere by UBS AG (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. This definition is significant for two reasons. First, it restricts the stabiliser to UBS AG and its related corporations. Second, it captures not only actual purchases but also offers or agreements to buy—meaning that pre-trade arrangements and commitments may fall within the definition.
Finally, Section 2 defines “securities” by reference to the SFA’s definition in section 239(1). This ensures that the exemption is interpreted consistently with the SFA’s broader regulatory framework.
Section 3: Exemption is the operative provision. It states that Sections 197 and 198 of the SFA shall not apply to stabilising action taken in respect of the Notes, within 30 days from the date of issue, with specified counterparties and acquisition thresholds.
While the extract does not reproduce Sections 197 and 198, their effect in practice is to prohibit or restrict certain market conduct that could amount to improper price support or manipulation. The Regulations therefore function as a conditional “safe harbour” from those prohibitions for stabilising conduct that meets the conditions.
The exemption applies only if the stabilising action is taken with one of the following categories:
- (a) an institutional investor
- (b) a relevant person as defined in section 275(2) of the SFA
- (c) a person who acquires the Notes as principal, provided that the consideration for the acquisition is not less than $200,000 (or its equivalent in a foreign currency) for each transaction, whether paid in cash or by exchange of securities or other assets
These conditions are designed to limit the exemption to transactions involving sophisticated counterparties or sufficiently large trades. The inclusion of “relevant person” (by cross-reference) suggests that the SFA’s existing taxonomy of regulated persons is being used to narrow the scope. The $200,000 threshold in paragraph (c) is also a practical gatekeeper: it prevents the exemption from being used in smaller retail-like transactions where price support could be more easily perceived as manipulative.
Two additional compliance points follow from the wording:
- Time-limitation: the stabilising action must occur within 30 days from the date of issue. This is a hard boundary; conduct outside the window would not benefit from the exemption.
- Instrument specificity: the stabilising action must relate to the defined “Notes”. If the stabiliser trades different instruments, or a different tranche with different terms, the exemption may not apply.
How Is This Legislation Structured?
The Regulations are short and structured in three main provisions:
- Section 1 (Citation and commencement): identifies the Regulations and their effective date.
- Section 2 (Definitions): defines “Notes”, “securities”, and “stabilising action”. These definitions determine the scope of the exemption.
- Section 3 (Exemption): provides the exemption from the SFA’s market conduct provisions (Sections 197 and 198) for stabilising action in respect of the Notes, within a specified time and with specified counterparties/acquisition thresholds.
There are no additional parts or complex schedules in the extract provided. The legislative technique is therefore “minimalist”: it relies heavily on cross-references to the SFA for key concepts (such as “relevant person” and the meaning of “securities”).
Who Does This Legislation Apply To?
Although the exemption is framed as a carve-out from the SFA’s prohibitions, it effectively applies to market participants who may undertake stabilising action in relation to the specified Notes. Based on the definition of “stabilising action”, the exemption is directed at UBS AG and its related corporations (and their stabilisation activities) when they buy, offer to buy, or agree to buy the Notes to stabilise or maintain market price.
In terms of counterparties, Section 3 limits the exemption to stabilising transactions involving: (i) institutional investors; (ii) relevant persons (as defined in the SFA); or (iii) principal acquirers meeting the $200,000 per transaction consideration threshold. Accordingly, even if UBS (or a related corporation) undertakes stabilising action, the exemption may not be available if the trades are conducted with counterparties outside these categories or below the threshold.
Why Is This Legislation Important?
This Regulations is important because it illustrates how Singapore’s market conduct regime balances two competing objectives: (1) preventing market manipulation and improper price support, and (2) permitting legitimate stabilisation practices in primary issuance contexts. Stabilisation can improve liquidity and reduce volatility immediately after issuance, but it must be tightly controlled to avoid undermining market integrity.
From a practitioner’s perspective, the value of the Regulations lies in its conditional exemption. It provides a structured basis for advising on whether stabilising trades are likely to fall outside the prohibitions in the SFA. The exemption is narrow, which means legal advice must be fact-specific: counsel should confirm the instrument identity (the exact Notes), the stabiliser identity (UBS AG or related corporations), the timing (within 30 days from issue), and the counterparty/acquisition criteria.
Enforcement risk remains even with an exemption. The exemption only removes the application of Sections 197 and 198; it does not necessarily immunise conduct from other legal duties or regulatory expectations. For example, stabilising conduct must still be consistent with the overall market conduct framework and any other applicable requirements under the SFA and related regulations. Practitioners should therefore treat the exemption as a targeted safe harbour, not a blanket approval of all stabilisation-related behaviour.
Practically, the Regulations also affect transaction documentation and execution. If stabilisation is contemplated, firms typically need to ensure that trade counterparties are correctly classified (institutional investor vs relevant person vs principal acquirer meeting the threshold) and that the consideration threshold is satisfied on a per-transaction basis, including where consideration is paid via exchange of securities or other assets.
Related Legislation
- Securities and Futures Act (Cap. 289) — in particular Sections 197, 198, 239(1), 275(2), and the authorising provision in section 337(1)
- Futures Act (as referenced in the provided metadata)
- Stabilising Act (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 2005 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the official text for authoritative provisions.