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
- Status: Current version (as at 27 March 2026)
- Key Provisions: Section 2 (Definitions); Section 3 (Exemption)
- Regulatory Focus: Exemption from market conduct restrictions for stabilising actions relating to specified notes
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 targeted regulatory instrument made under the Securities and Futures Act (“SFA”). In plain terms, it creates a specific exemption allowing certain market participants to take “stabilising action” in relation to a particular issuance of notes, without triggering specified market conduct prohibitions in the SFA.
Stabilising action is a common feature of some debt and capital markets transactions. During the initial period after issuance, market makers or arrangers may buy (or offer to buy) securities to help maintain orderly trading and reduce excessive price volatility. However, because stabilisation can also be perceived as interfering with market price formation, the SFA contains restrictions designed to prevent improper market manipulation and misleading conduct.
This set of Regulations reconciles those competing policy objectives. It does not broadly legalise stabilisation for all securities and all circumstances. Instead, it grants a narrow exemption for stabilising actions taken in respect of a defined set of “Notes” (the Woori Bank notes described in the Regulations), within a defined time window, and for defined categories of counterparties/investors and acquisition structures.
What Are the Key Provisions?
Section 1 (Citation and commencement) provides the formal name of the Regulations and states that they come into operation on 8 December 2005. For practitioners, this matters when assessing whether stabilising activity occurred within the legal framework of the exemption.
Section 2 (Definitions) is crucial because the exemption is only as broad as its defined terms. The Regulations define:
- “Notes”: the 5-year floating rate senior notes due December 2010 issued by Woori Bank for a principal amount of up to EUR 300 million, issued pursuant to a US$4,000,000,000 Global Medium-Term Note Programme.
- “securities”: refers to the meaning in section 239(1) of the SFA (so the exemption is anchored to the SFA’s statutory concept of “securities”).
- “stabilising action”: 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.
Two aspects are particularly important for legal analysis. First, the exemption is tied to a specific issuer and specific instrument (“Notes”). Second, the stabilising actor is effectively limited to Merrill Lynch International and its related corporations. This means that stabilising conduct by other entities would not automatically fall within the exemption, even if it is otherwise similar in effect.
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 of the Notes, with stabilising action undertaken with any of the following counterparties/acquisition circumstances:
- (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 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.
In practical terms, Section 3 creates a time-limited and counterparty-limited carve-out. The exemption is not a blanket permission to stabilise; it is a narrow “safe harbour” from the SFA’s market conduct provisions for stabilising activity that meets all conditions: (i) the stabilising action relates to the specified Notes; (ii) it is taken within the first 30 days from issue; and (iii) the stabilising transactions are with the specified categories of persons or meet the minimum consideration threshold.
For practitioners, the minimum consideration threshold in Section 3(c) is a common drafting technique to restrict the exemption to transactions likely to involve professional or substantial investors, thereby reducing the risk of retail-facing price distortion. The inclusion of consideration paid by exchange of securities or other assets is also significant: it prevents structuring around the threshold by using non-cash consideration.
How Is This Legislation Structured?
The Regulations are short and structured as a typical Singapore subsidiary legislative instrument. They contain:
- Section 1: Citation and commencement (when the Regulations take effect).
- Section 2: Definitions (defining “Notes,” “securities,” and “stabilising action”).
- Section 3: Exemption (the operative carve-out from SFA sections 197 and 198, subject to timing and counterparty conditions).
Notably, there are no additional parts or detailed procedural requirements in the text provided. The legal effect is therefore primarily achieved through the defined scope in Section 2 and the exemption conditions in Section 3.
Who Does This Legislation Apply To?
The exemption is directed at conduct that qualifies as “stabilising action” under the Regulations. Because “stabilising action” is defined as actions taken by Merrill Lynch International (or its related corporations), the practical beneficiaries are those entities acting in that capacity. However, the exemption also depends on the identity of the counterparty or the acquisition structure—so the Regulations indirectly affect the counterparties that transact in the stabilisation period.
Section 3 specifies that the exemption applies where stabilising action is taken with institutional investors, relevant persons (as defined in the SFA), or persons acquiring the Notes as principal with a minimum consideration of $200,000 per transaction (or equivalent). Accordingly, the Regulations are most relevant to arrangers, dealers, and market participants involved in the distribution and early trading of the specified Woori Bank notes, as well as to counterparties meeting the statutory thresholds.
Why Is This Legislation Important?
This Regulations is important because it demonstrates how Singapore’s market conduct framework can accommodate legitimate market practices while maintaining safeguards against manipulation. Sections 197 and 198 of the SFA (which are excluded by the exemption) represent the legal boundaries around conduct that could otherwise be characterised as improper market activity. By carving out qualifying stabilisation, the Regulations reduces legal uncertainty for transaction participants during the sensitive post-issuance period.
From a compliance and risk perspective, the exemption is valuable precisely because it is conditional. A lawyer advising a dealer or arranger must map the transaction facts to each element: the instrument must be the defined “Notes”; the stabilising actor must be within the defined stabilising party; the timing must fall within 30 days from issue; and the counterparties must fall within the defined categories or meet the $200,000 minimum consideration requirement. Missing any one element could mean that the stabilising conduct remains subject to the SFA’s market conduct restrictions.
Finally, the Regulations’ narrow drafting—single issuer, single note programme, and a specific stabilising actor—reflects a regulatory approach that is tailored to particular market events. Practitioners should therefore treat this as a transaction-specific exemption rather than a general stabilisation licence. Where stabilisation is contemplated for other issuances or by other institutions, separate exemptions or compliance strategies may be required.
Related Legislation
- Securities and Futures Act (Cap. 289) — in particular sections 197, 198, 239(1), 275(2), and the enabling provision 337(1).
- Stabilising Act — referenced in the provided metadata (practitioner note: confirm the exact Singapore statute name and provisions in your internal legislation database).
- Futures Act — referenced in the provided metadata (practitioner note: confirm relevance to this specific exemption).
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.