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 (Cap. 289)
- Enacting Power: Section 337(1) of the Securities and Futures Act
- Commencement: 23 November 2005
- Regulatory Focus: Market conduct rules for stabilising actions in relation to specific notes
- Key Provisions: Section 2 (definitions); Section 3 (exemption)
- Regulation Number: SL 732/2005
- Status (as provided): Current version as at 27 March 2026
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 is a targeted regulatory instrument. In essence, it creates a narrow exemption from certain market conduct provisions in the Securities and Futures Act (the “SFA”) for stabilising activities carried out in connection with a particular issuance of notes.
In plain language, the Regulations recognise that, in some debt capital market transactions, market makers or arrangers may take steps to stabilise the trading price of newly issued securities shortly after issuance. Such stabilising actions can help manage volatility and support orderly trading. However, stabilising conduct can also resemble prohibited market manipulation if not properly constrained. This Regulations therefore provides a controlled “safe harbour” for stabilising actions—so long as strict conditions are met.
The exemption is not general. It is expressly tied to a defined set of “Notes” (a specific US$ floating rate notes issuance by The Korea Development Bank) and to stabilising actions taken by specified financial institutions (or their related corporations). It also limits the exemption to a defined time window—within 30 days from the date of issue—and to specified categories of counterparties/investors.
What Are the Key Provisions?
Section 1 (Citation and commencement) provides the formal title and states that the Regulations come into operation on 23 November 2005. For practitioners, this matters because the exemption’s availability depends on the timing of the stabilising action relative to the issuance of the notes and the statutory framework in force at the relevant time.
Section 2 (Definitions) is crucial because the exemption turns on the meaning of “Notes” and “stabilising action.” The Regulations define:
- “Notes” as the 7-year US$ floating rate notes due November 2012 issued by The Korea Development Bank for a principal amount of up to US$500 million.
- “securities” by reference to the SFA definition in section 239(1). This ensures that the exemption is anchored to the SFA’s broader securities framework.
- “stabilising action” as an action taken in Singapore or elsewhere by Barclays Capital Inc., Credit Suisse First Boston LLC, Morgan Stanley & Co. International Limited, or any of their related corporations. The action must involve buying, or offering or agreeing to buy, any of the Notes to stabilise or maintain the market price of the Notes in Singapore or elsewhere.
From a compliance perspective, these definitions are the gatekeepers. If the instrument is not the specified “Notes,” or if the stabilising conduct is not carried out by the specified entities/related corporations, the exemption will not apply. Similarly, if the conduct is not directed at stabilising or maintaining market price (for example, ordinary hedging or liquidity provision not intended to stabilise price), the exemption may be unavailable.
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 the stabilising action is taken with one of the following counterpart 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, but only if the consideration 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.
Practically, Section 3 does two things. First, it carves out stabilising actions from the prohibitions or restrictions contained in sections 197 and 198 of the SFA. Second, it conditions the carve-out on both time (within 30 days from issue) and counterparty/investor category (institutional investors, relevant persons, or principal acquirers meeting the minimum consideration threshold).
For lawyers advising issuers, arrangers, or dealers, the most important interpretive tasks typically include: (i) confirming the exact identity of the Notes and the issuance date; (ii) mapping the stabilising participants to the named entities and their related corporations; (iii) documenting the stabilising purpose (price stabilisation/maintenance); and (iv) ensuring that trades are executed only with eligible counterparties and, where relevant, that the $200,000 minimum consideration threshold is satisfied per transaction.
How Is This Legislation Structured?
The Regulations are concise and consist of three substantive provisions:
- Section 1 sets out the citation and commencement date.
- Section 2 provides definitions that determine the scope of the exemption—particularly “Notes” and “stabilising action.”
- Section 3 creates the exemption by disapplying specified SFA provisions (sections 197 and 198) to stabilising actions meeting the defined conditions.
There are no additional parts or schedules in the extract provided. The structure reflects the Regulations’ purpose: a narrowly tailored exemption rather than a comprehensive market conduct code.
Who Does This Legislation Apply To?
Although the exemption is framed as disapplying certain SFA provisions, it effectively applies to market participants who undertake stabilising actions in relation to the specified Notes. In particular, the definition of “stabilising action” limits the relevant actors to Barclays Capital Inc., Credit Suisse First Boston LLC, Morgan Stanley & Co. International Limited, and their related corporations. Therefore, the exemption is most relevant to those entities (and their corporate groups) when they conduct stabilisation activities.
Additionally, Section 3 restricts the exemption based on the counterparty to the stabilising transactions. The exemption is available only where stabilising actions are taken with an institutional investor, a relevant person (as defined in the SFA), or a principal acquirer meeting the $200,000 minimum consideration per transaction. This means that even if the stabilising actor is within the defined group, the exemption may fail if trades are executed with ineligible counterparties or without meeting the consideration threshold.
Why Is This Legislation Important?
This Regulations is important because it demonstrates how Singapore’s market conduct framework balances two competing policy objectives: (i) preventing market manipulation and improper trading practices, and (ii) allowing legitimate stabilisation practices in capital markets transactions under controlled conditions.
By disapplying sections 197 and 198 of the SFA for a limited period and within defined counterparty categories, the Regulations provides legal certainty to transaction participants. Without such an exemption, stabilising bids or purchases could be argued to fall within prohibitions relating to market conduct. The exemption therefore reduces regulatory risk for arrangers and dealers who need to perform stabilisation to support orderly trading after issuance.
From an enforcement and compliance standpoint, the narrow tailoring is equally significant. The exemption is time-bound (30 days from issue), instrument-specific (the defined Korea Development Bank notes), and actor-specific (named stabilising entities and their related corporations). It also imposes counterparty eligibility constraints, including a quantitative threshold for principal acquirers. These limitations suggest that regulators expect stabilisation to be transparent, documented, and confined to the permitted framework.
For practitioners, the key practical impact is that advice must be structured around evidence and process: confirming the issuance date, maintaining trade records showing eligible counterparties, verifying minimum consideration where applicable, and ensuring that stabilising activity is properly characterised and authorised within the relevant corporate group. Where stabilisation is conducted “in Singapore or elsewhere,” firms must also consider cross-border execution and documentation to demonstrate that the stabilising purpose relates to maintaining the market price of the Notes.
Related Legislation
- Securities and Futures Act (Cap. 289) — particularly sections 197, 198, 239(1), 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. 51) Regulations 2005 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the official text for authoritative provisions.