Statute Details
- Title: Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Notes) (No. 51) Regulations 2005
- Act Code: SFA2001-S732-2005
- Legislation Type: Subsidiary legislation (SL)
- Authorising Act: Securities and Futures Act (Cap. 289)
- Enacting Power: Section 337(1) of the Securities and Futures Act
- Citation: SL 732/2005
- Commencement: 23 November 2005
- Status: Current version (as at 27 March 2026)
- Key Provisions: 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. 51) Regulations 2005 (“Stabilising Action Exemption Regulations”) creates a targeted regulatory carve-out from certain market conduct rules in the Securities and Futures Act (the “SFA”). In practical terms, it allows specified market participants to take “stabilising action” in relation to a particular issuance of notes without being treated as breaching the general prohibitions found in the SFA.
Stabilisation is a familiar concept in capital markets. When new debt securities are issued, market liquidity and price discovery can be volatile. Under certain conditions, arrangers or dealers may support the market price by buying (or offering to buy) the relevant securities during a limited period. This is intended to reduce disorderly trading and support orderly market conditions, rather than to manipulate prices.
This legislation is narrow and issuance-specific. It defines “Notes” as a particular tranche of 7-year US$ floating rate notes due November 2012 issued by The Korea Development Bank, up to US$500 million. It then exempts stabilising action taken within 30 days from the date of issue, but only when the stabilising purchases are made by specified categories of persons and when minimum consideration thresholds are met for certain purchasers.
What Are the Key Provisions?
Section 1 (Citation and commencement) provides the short title and states that the Regulations come into operation on 23 November 2005. For practitioners, this matters because the exemption is time-bound and tied to the “date of issue” of the Notes; the Regulations’ commencement date confirms the legal basis for any stabilisation activities conducted after that date.
Section 2 (Definitions) is central because it determines the scope of the exemption. The Regulations define:
- “Notes” as the 7-year US$ floating rate notes due November 2012 issued by The Korea Development Bank, with a principal amount of up to US$500 million.
- “securities” by reference to the SFA definition in section 239(1). This ensures that the stabilisation framework is anchored to the SFA’s broader regulatory taxonomy.
- “stabilising action” as an action taken in Singapore or elsewhere by specified financial institutions (Barclays Capital Inc., Credit Suisse First Boston LLC, Morgan Stanley & Co. International Limited, 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 both participant-specific and purpose-specific. It is not enough that a person buys the Notes; the action must be within the defined stabilisation purpose (stabilise or maintain market price) and must be carried out by the named institutions or their related corporations. This reduces ambiguity when assessing whether a particular trading activity qualifies for the exemption.
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 any of the Notes, within 30 days from the date of issue, with respect to stabilising action undertaken by:
- (a) an institutional investor;
- (b) a relevant person as defined in section 275(2) of the SFA; or
- (c) a person who acquires the Notes as principal, provided that the consideration for each transaction is not less than $200,000 (or its equivalent in a foreign currency), whether paid in cash or by exchange of securities or other assets.
Although the text provided does not reproduce sections 197 and 198 of the SFA, the exemption’s structure indicates that those sections contain market conduct restrictions that would otherwise capture stabilising trading. The Regulations effectively “turn off” those provisions for the defined stabilising activity, but only within the specified time window and only for the specified categories of persons.
The most practitioner-relevant elements of Section 3 are:
- Time limit: stabilising action must occur within 30 days from the date of issue of the Notes. This is a hard boundary; trades outside the window would not benefit from the exemption.
- Person categories: the exemption is available for institutional investors, “relevant persons” (as defined in the SFA), and principal acquirers meeting the minimum consideration threshold.
- Minimum consideration threshold for principal acquirers: $200,000 per transaction (or equivalent) is required. The threshold applies regardless of whether consideration is paid in cash or via exchange of securities or other assets. This is designed to exclude small-lot or retail-scale acquisitions from the stabilisation exemption framework.
How Is This Legislation Structured?
The Regulations are structured in a straightforward, short-form manner typical of targeted market conduct exemptions:
- Section 1 sets out the citation and commencement date.
- Section 2 provides definitions, including the specific identification of the “Notes” and the definition of “stabilising action”.
- Section 3 contains the exemption, specifying which SFA provisions are disapplied, the time window, and the categories of persons eligible for the exemption.
There are no additional parts or complex schedules in the extract. The legal effect is therefore concentrated in Section 3, supported by the precision of the definitions in Section 2.
Who Does This Legislation Apply To?
In scope are stabilising actions taken in Singapore or elsewhere in relation to the defined Notes. The Regulations do not apply to all securities or all stabilisation activities; they are limited to the specified issuance and to stabilising actions carried out by the defined institutions (or their related corporations) as described in the definition of “stabilising action”.
As to eligible actors, Section 3 further narrows the exemption to stabilising action undertaken by (i) an institutional investor, (ii) a “relevant person” under section 275(2) of the SFA, or (iii) a principal acquirer meeting the $200,000 minimum consideration per transaction. For legal practitioners advising issuers, underwriters, or trading desks, this means the exemption is not merely about the trading strategy; it is also about the legal status of the counterparty/participant and the economic terms of the acquisition.
Why Is This Legislation Important?
This Regulations is important because it provides legal certainty for market participants involved in the distribution of debt securities. Without an exemption, stabilisation trading could be scrutinised under general market conduct prohibitions. By disapplying specific SFA provisions (sections 197 and 198) for a defined stabilisation programme, the Regulations enables orderly market support while maintaining the integrity of Singapore’s regulatory framework.
From a compliance and enforcement standpoint, the Regulations also demonstrates how Singapore’s market conduct regime balances two competing objectives: (1) preventing manipulative or misleading trading practices, and (2) allowing legitimate stabilisation practices that are time-limited, purpose-driven, and conducted by appropriate persons. The 30-day limit and the minimum consideration threshold for principal acquirers are key safeguards that reduce the risk of abuse.
For practitioners, the operational impact is significant. Advising on stabilisation requires careful documentation of: (i) the identity of the Notes (to confirm they match the defined issuance), (ii) the identity of the stabilising entity (to confirm it falls within the named institutions or their related corporations), (iii) the timing of trades (to ensure they fall within 30 days from the date of issue), and (iv) the status and transaction size/consideration of the acquiring party (particularly for principal acquirers). Failure on any of these elements could mean the exemption does not apply, exposing trading activity to the underlying SFA prohibitions.
Related Legislation
- Securities and Futures Act (Cap. 289) — in particular, sections 197, 198, 239(1), 275(2), and the enabling provision in section 337(1)
- Futures Act (as referenced in the metadata)
- Stabilising Act (as referenced in the metadata)
- Timeline (legislation versioning reference)
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. 51) Regulations 2005 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the official text for authoritative provisions.