Statute Details
- Title: Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Notes) (No. 55) Regulations 2005
- Act Code: SFA2001-S786-2005
- Type: Subsidiary Legislation (SL)
- Authorising Act: Securities and Futures Act (Cap. 289)
- Enacting Power: Section 337(1) of the Securities and Futures Act
- Commencement: 8 December 2005
- Regulation Number: SL 786/2005
- Status: Current version (as at 27 Mar 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. 55) Regulations 2005 (“Stabilising Action Exemption Regulations”) is a narrow, targeted set of regulations that creates a statutory exemption from certain market conduct rules in the Securities and Futures Act (“SFA”) for a specific type of stabilising activity relating to a particular bond issuance.
In plain language, the Regulations recognise that, in some debt capital market transactions, market makers or arrangers may engage in “stabilising action” shortly after issuance to help maintain orderly trading and reduce volatility. However, stabilisation can resemble conduct that market conduct provisions are designed to prevent—such as improper support of prices or misleading trading activity. The Regulations therefore carve out an exemption, but only for stabilising actions that meet strict conditions.
The exemption is not general. It is tied to (i) a defined set of “Notes” (a specific Woori Bank issuance under a Global Medium-Term Note Programme), (ii) a defined concept of “stabilising action” (conduct by Merrill Lynch International and related corporations), and (iii) a limited time window (within 30 days from the date of issue). It also applies only to specified categories of counterparties/investors and only where the acquisition consideration meets a minimum threshold.
What Are the Key Provisions?
Section 1: Citation and commencement. This section provides the short title and states that the Regulations come into operation on 8 December 2005. For practitioners, this matters because the exemption is time-bound and must be assessed against the issuance date and the regulatory commencement date.
Section 2: Definitions. The Regulations define three critical terms that effectively determine the scope of the exemption:
- “Notes”. The Regulations define “Notes” as the “5-year floating rate senior notes due December 2010” issued by Woori Bank for a principal amount of up to EURO 300 million under a specified US$4,000,000,000 Global Medium-Term Note Programme. This definition is highly specific: stabilising action must relate to these Notes, not to other instruments or other issuers.
- “securities”. This adopts the meaning in section 239(1) of the SFA. This is important because the market conduct provisions being exempted are framed around “securities” and related trading conduct.
- “stabilising action”. This is defined as an action taken in Singapore or elsewhere by Merrill Lynch International (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 both actor-specific (Merrill Lynch International and related corporations) and purpose-specific (stabilisation/price maintenance), and it covers both actual purchases and offers/agreements to buy.
Section 3: Exemption from Sections 197 and 198 of the SFA. This is the operative provision. 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, with respect to stabilising actions involving:
- (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 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, the practical effect is that stabilising activity by the defined stabiliser (Merrill Lynch International/related corporations) can occur without triggering the prohibitions or restrictions contained in Sections 197 and 198—but only when the stabilising trades are conducted with the specified counterparties and within the specified post-issuance period.
Time limitation (30 days from issue). The exemption is strictly temporal. Even if the stabilising action is otherwise within scope, it falls outside the exemption if undertaken after the 30-day window. This is a key compliance point for trading desks and legal/compliance teams monitoring stabilisation programmes.
Counterparty categories and minimum consideration. The exemption is structured around who the stabilising trades are with. Institutional investors and “relevant persons” are included without an explicit minimum consideration threshold in the Regulations. For principal acquirers, however, there is a clear minimum consideration requirement of $200,000 per transaction (or equivalent). The Regulations also clarify that consideration may be paid in cash or by exchange of securities or other assets—meaning that structuring through in-kind consideration is contemplated, but must still meet the minimum value threshold.
How Is This Legislation Structured?
Although the Regulations are short, they follow a conventional subsidiary legislation structure:
- Section 1 (Citation and commencement): identifies the instrument and its effective date.
- Section 2 (Definitions): sets the interpretive foundation by defining “Notes,” “securities,” and “stabilising action.” These definitions are central because they tightly constrain the exemption’s subject matter and permitted conduct.
- Section 3 (Exemption): provides the legal carve-out from the SFA’s market conduct provisions (Sections 197 and 198), specifying the conditions (time window, type of stabilising action, and eligible counterparties/consideration).
There are no additional parts or schedules in the extract provided. The Regulations operate as a targeted exemption instrument rather than a comprehensive regulatory regime.
Who Does This Legislation Apply To?
The Regulations apply to stabilising actions in respect of the defined “Notes” that are taken within the 30-day period from the date of issue. In practice, the exemption is relevant primarily to the stabilising arranger/market participant—here, Merrill Lynch International and its related corporations—because the definition of “stabilising action” is actor-specific.
However, the exemption’s conditions also depend on the counterparty to the stabilising trades. Accordingly, the Regulations indirectly affect issuers, dealers, and compliance teams involved in the distribution and trading of the Notes by determining which counterparties can be involved in stabilising trades without attracting the prohibitions in Sections 197 and 198 of the SFA. For principal acquisitions, the $200,000 minimum consideration requirement is particularly important for transaction documentation, trade confirmations, and valuation of in-kind consideration.
Why Is This Legislation Important?
This exemption is important because it balances two competing regulatory objectives: (1) preventing market misconduct and improper price support, and (2) allowing legitimate stabilisation practices commonly used in capital markets to promote orderly trading after issuance. By carving out stabilising action from specific SFA provisions, the Regulations provide legal certainty for structured debt issuance programmes.
For practitioners, the compliance value lies in the precision of the exemption. It is not enough to know that stabilisation is generally permitted; the exemption depends on meeting all conditions simultaneously:
- the instrument must be the defined Woori Bank Notes;
- the stabiliser must be Merrill Lynch International or its related corporations;
- the action must be taken to stabilise or maintain market price and must involve buying (or offers/agreements to buy);
- the trades must occur within 30 days from the date of issue; and
- the counterparties must fall within the institutional/relevant person categories, or—if the counterparty acquires as principal—must meet the $200,000 minimum consideration threshold per transaction.
From an enforcement perspective, the Regulations reduce the risk that stabilisation programmes are treated as prohibited market conduct under Sections 197 and 198. But they also highlight the risk of falling outside the exemption—particularly through timing errors (trades after the 30-day window), counterparty misclassification, or failure to document/verify the minimum consideration for principal acquisitions.
In day-to-day practice, this means legal and compliance teams should ensure that stabilisation documentation, trade allocation, and post-trade monitoring systems are capable of capturing: (i) trade dates relative to the issue date, (ii) whether the counterparty is an institutional investor or a “relevant person,” and (iii) the value basis for principal acquisitions (including in-kind consideration). These are the types of details that can determine whether the statutory exemption applies.
Related Legislation
- Securities and Futures Act (Cap. 289) — particularly 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)
- Timeline / Legislation timeline (for version control and amendment history)
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. 55) Regulations 2005 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the official text for authoritative provisions.