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
- Type: Subsidiary Legislation (SL)
- Authorising Act: Securities and Futures Act (SFA), specifically section 337(1)
- Legislative Instrument No.: SL 732/2005
- Citation: Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Notes) (No. 51) Regulations 2005
- Commencement: 23 November 2005
- Status: Current version (as at 27 March 2026)
- Key Provisions:
- Section 1: Citation and commencement
- Section 2: Definitions (including “Notes” and “stabilising action”)
- Section 3: Exemption from sections 197 and 198 of the SFA for specified stabilising action
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”) is a targeted Singapore regulatory instrument that creates a narrow exemption from certain market conduct rules under the Securities and Futures Act (SFA). In practical terms, it allows specified financial institutions to undertake “stabilising action” in relation to a particular bond issuance—without breaching the general prohibitions that would otherwise apply.
Stabilisation is a common feature of securities offerings. When new debt securities are issued, market participants may seek to reduce excessive price volatility in the immediate post-issuance period. However, stabilising trades can resemble conduct that market conduct laws typically prohibit—such as manipulative or misleading trading. The SFA therefore contains provisions that restrict certain dealings. This subsidiary legislation carves out an exemption, but only for stabilising action that meets strict conditions.
Importantly, the exemption is not general. It is tied to a defined set of “Notes” (a specific 7-year US dollar floating rate note issuance by The Korea Development Bank) and to stabilising action taken by named stabilising entities (Barclays Capital Inc., Credit Suisse First Boston LLC, Morgan Stanley & Co. International Limited, and their related corporations). The exemption is also time-limited (within 30 days from the date of issue) and transaction-size limited (for certain categories of persons).
What Are the Key Provisions?
1. Definitions that tightly scope the exemption (Section 2)
The Regulations begin by defining the key terms that determine whether conduct falls within the exemption. The definition of “Notes” is highly specific: it refers to 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. This means the exemption is not available for other issuances, even if they are similar in structure or denomination.
The Regulations also define “stabilising action” as an action taken in Singapore or elsewhere by the specified stabilising entities (Barclays Capital Inc., Credit Suisse First Boston LLC, Morgan Stanley & Co. International Limited, or 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. This definition is crucial for practitioners because it links the exemption to both (i) the identity of the stabilising party and (ii) the purpose of the trades (stabilisation/price maintenance), not merely to the mechanics of trading.
2. The exemption from market conduct provisions (Section 3)
The operative provision is Section 3. It provides that “Sections 197 and 198 of the Act shall not apply” to stabilising action taken in respect of the defined Notes, within 30 days from the date of issue, provided the stabilising action is undertaken by one of the specified categories of persons.
While the extract does not reproduce the text of sections 197 and 198 of the SFA, the structure indicates that those sections contain prohibitions or restrictions relevant to market conduct—likely including prohibitions against market manipulation and/or restrictions on certain dealings that could be characterised as manipulative. The exemption therefore functions as a legal “safe harbour” for stabilisation activity that would otherwise be caught by those provisions.
3. Time limit: stabilising action must occur within 30 days from issue
Section 3 imposes a clear temporal boundary: the stabilising action must be taken “within 30 days from the date of issue of the Notes.” For compliance, this means firms must be able to evidence the issuance date and maintain trade records demonstrating that stabilisation activity falls within the permitted window. Any stabilising purchases outside the 30-day period would not benefit from the exemption and could expose the firm to enforcement risk under the underlying SFA provisions.
4. Person-based conditions: who may rely on the exemption
Section 3(a)–(c) sets out the categories of persons whose stabilising action is exempt. The exemption applies to stabilising action taken within the 30-day period with:
- (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, if 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.
For practitioners, these categories matter because they determine the counterparties with whom stabilising trades may be executed while remaining within the exemption. The “institutional investor” and “relevant person” concepts are anchored in the SFA’s definitions, meaning that firms must map their counterparties to those statutory categories. The $200,000 threshold in Section 3(c) is a practical safeguard: it restricts the exemption where the counterparty acquires as principal to transactions of a minimum size, reducing the risk that stabilisation becomes indistinguishable from retail-facing or small-lot trading.
5. Geographical element: action may be taken in Singapore or elsewhere
Although the exemption is framed as stabilising action “in respect of any of the Notes,” the definition of “stabilising action” expressly contemplates actions taken “in Singapore or elsewhere.” This is consistent with cross-border bond issuance and trading. However, the purpose is to stabilise or maintain the market price “in Singapore or elsewhere.” This means compliance teams should consider both Singapore and overseas trading venues and ensure that their stabilisation rationale and documentation align with the statutory definition.
How Is This Legislation Structured?
The Regulations are short and structured as a typical subsidiary legislative instrument with a small number of sections:
Section 1 (Citation and commencement) confirms the legal name of the instrument and provides that it came into operation on 23 November 2005.
Section 2 (Definitions) establishes the key terms that control the scope of the exemption, especially the narrow definition of “Notes” and the functional definition of “stabilising action” tied to named stabilising entities and the stabilisation purpose.
Section 3 (Exemption) is the core operative clause. It states that the market conduct provisions in sections 197 and 198 of the SFA do not apply to qualifying stabilising action, subject to the time limit (30 days from issue) and the counterparty/person conditions in paragraphs (a)–(c).
Who Does This Legislation Apply To?
In substance, the exemption is directed at market participants involved in stabilising trades for the specified Notes. The definition of “stabilising action” identifies the stabilising entities by name: Barclays Capital Inc., Credit Suisse First Boston LLC, Morgan Stanley & Co. International Limited, and their related corporations. Therefore, the exemption is primarily relevant to these firms (and their related corporations) when they undertake stabilisation activities.
However, Section 3 also conditions the exemption on the nature of the counterparty relationship—whether the stabilising action is with an institutional investor, a relevant person, or a principal acquirer meeting the $200,000 minimum consideration threshold. Accordingly, the Regulations affect not only the stabilising firms’ internal compliance but also their trading counterparties and execution arrangements. Firms should therefore ensure that their counterparties are correctly classified under the SFA framework and that transaction documentation supports the statutory thresholds.
Why Is This Legislation Important?
This subsidiary legislation is important because it provides legal certainty for a specific, time-bound stabilisation programme in a particular bond issuance. Without such an exemption, stabilising trades—although commercially intended to reduce volatility—could be argued to fall within the ambit of market conduct prohibitions under the SFA. The Regulations therefore facilitate orderly market functioning while preserving the integrity objectives of the SFA.
From a practitioner’s perspective, the value lies in the precision of the safe harbour. The exemption is constrained by: (i) the identity of the Notes, (ii) the identity of the stabilising entities, (iii) the 30-day post-issue window, and (iv) the counterparty/person categories and transaction-size threshold. These constraints mean that compliance cannot be generic. Firms must implement controls to confirm that trades are within the permitted scope and that records can demonstrate compliance with each statutory condition.
Enforcement risk remains if any element falls outside the exemption. For example, stabilising action after the 30-day period, stabilising trades involving non-qualifying counterparties, or stabilisation in respect of different notes would not be covered. In such cases, the underlying SFA provisions (sections 197 and 198) would apply, potentially exposing firms to regulatory action and requiring careful legal analysis of whether the conduct is otherwise lawful.
Related Legislation
- Securities and Futures Act (Cap. 289) — in particular sections 197, 198, 239(1), 275(2), and the regulation-making power in section 337(1)
- Futures Act (as referenced in the legislation metadata)
- Stabilising Act (as referenced in the legislation 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.