Statute Details
- Title: Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Notes) (No. 6) Regulations 2004
- Act Code: SFA2001-S113-2004
- Type: Subsidiary Legislation (SL)
- Authorising Act: Securities and Futures Act (Cap. 289)
- Enacting power: Section 337(1) of the Securities and Futures Act
- Commencement: 12 March 2004
- Legislative status (as provided): Current version as at 27 March 2026
- Key provisions: Section 1 (Citation and commencement), Section 2 (Definitions), Section 3 (Exemption)
- Regulation number: SL 113/2004
What Is This Legislation About?
The Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Notes) (No. 6) Regulations 2004 (“Stabilising Action Exemption Regulations”) is a narrow, transaction-specific set of rules made under the Securities and Futures Act (SFA). In plain terms, it creates a limited exemption from certain “market conduct” provisions that would otherwise restrict or regulate stabilising activities in the secondary market.
Stabilisation is a common feature of certain debt and capital market transactions. When new securities are issued, market liquidity and price discovery may be thin in the early days. Under a stabilisation programme, designated financial institutions may buy (or offer to buy) the securities to help maintain an orderly market price. This is intended to reduce volatility and support the initial trading environment.
However, stabilisation can raise regulatory concerns because buying to influence price can resemble prohibited market manipulation. The SFA’s market conduct framework therefore generally restricts conduct that may create misleading impressions about supply, demand, or price. These Regulations carve out a carefully bounded exception for stabilising action in relation to a specific class of notes issued by Industrial Bank of Korea.
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 12 March 2004. For practitioners, this matters for determining whether stabilising conduct occurred within the legal framework and for aligning the stabilisation window with the issuance date.
Section 2 (Definitions) is crucial because the exemption is tightly defined by both the instrument and the stabilisation participants. The Regulations define:
- “Notes” as the 10-year fixed rate lower tier II subordinated notes due March 2014 issued by Industrial Bank of Korea, with a principal amount of up to US$500 million.
- “stabilising action” as an action taken in Singapore or elsewhere by specified entities—Credit Suisse First Boston (Europe) Limited, The Hong Kong and Shanghai Banking Corporation Limited, UBS Limited, or any of their related corporations—to buy or offer or agree to buy the Notes in order to stabilise or maintain the market price of the Notes in Singapore or elsewhere.
This definition is both a scope limiter and an evidentiary anchor. If the stabilisation is not in respect of these particular notes, or is not undertaken by (or through) the specified stabilising institutions and their related corporations, the exemption will not apply.
Section 3 (Exemption) is the operative provision. It states that, subject to paragraph (2), sections 197 and 198 of the SFA shall not apply to any stabilising action carried out in respect of any of the Notes with respect to stabilising action carried out with certain counterparties. In effect, the Regulations remove the risk that stabilisation conduct would be treated as falling within the prohibitions or restrictions contained in those SFA sections.
Section 3(1) provides two categories of persons with whom the stabilising action may be carried out while still benefiting from the exemption:
- Persons referred to in section 274 of the SFA; and
- “sophisticated investors” as defined in section 275(2) of the SFA.
For a practitioner, this is a key compliance point. The exemption is not a blanket permission to stabilise against any market participant. It is limited to transactions involving either the specific class of persons in section 274 or sophisticated investors under section 275(2). The practical effect is that stabilising trades must be structured and documented so that counterparties fall within the permitted categories.
Section 3(2) imposes a strict time limit: the exemption does not apply to stabilising action carried out at any time after the expiry of the period of 30 calendar days from the date of the issuance of the Notes. This means the stabilisation programme must be completed (or at least any stabilising conduct must cease) within that 30-day window.
In market practice, stabilisation programmes often have a defined commencement date (typically around pricing/issuance) and a defined end date. The Regulations require careful calculation of the 30 calendar days from the “date of issuance” (a term that may require attention to the transaction documentation and regulatory filings). Any stabilising purchases or offers to buy after the expiry of the 30-day period would fall outside the exemption and could expose the conduct to the application of sections 197 and 198 of the SFA.
How Is This Legislation Structured?
The Regulations are structured in a straightforward, minimal format, reflecting their targeted purpose:
- Section 1 sets out the citation and commencement.
- Section 2 provides definitions that precisely identify the relevant notes and the stabilising action (including the permitted stabilisers).
- Section 3 contains the exemption, including both the counterparty limitations (section 3(1)) and the temporal limitation (section 3(2)).
There are no additional parts or complex schedules in the extract provided. This is typical of transaction-specific exemptions: the legal architecture is designed to be narrow, easily verifiable, and enforceable.
Who Does This Legislation Apply To?
Although the Regulations are made under the SFA and refer to stabilising action, they do not “apply” in the same broad way as a general regulatory regime. Instead, they operate as an exemption that benefits stabilising conduct that fits the defined parameters.
In practical terms, the exemption is relevant to:
- Designated stabilising institutions (Credit Suisse First Boston (Europe) Limited, The Hong Kong and Shanghai Banking Corporation Limited, UBS Limited, and their related corporations) when they conduct stabilising action as defined; and
- Counterparties to stabilising trades, because the exemption is limited to stabilising action carried out with persons in section 274 of the SFA or with sophisticated investors under section 275(2).
Accordingly, market participants should treat this as a compliance checklist: confirm the notes are the specified Industrial Bank of Korea notes, confirm the stabiliser is within the defined group, confirm the counterparty category, and confirm the stabilisation activity occurs within the 30 calendar day window from issuance.
Why Is This Legislation Important?
This legislation is important because it illustrates how Singapore balances two competing policy objectives: (1) allowing orderly market practices such as stabilisation in connection with new issuances, and (2) preventing conduct that could undermine market integrity. By exempting stabilising action from specific SFA provisions, the Regulations provide legal certainty to arrangers and stabilising banks—provided they comply with the strict conditions.
For practitioners, the key significance lies in risk management. Without an exemption, stabilising purchases could be scrutinised as potentially prohibited market conduct. The Regulations reduce that risk, but only within a narrow perimeter. In enforcement terms, the exemption is likely to be interpreted strictly: if any element fails (wrong notes, wrong stabiliser, wrong counterparty category, or stabilisation after the 30-day period), the exemption will not protect the conduct.
From a transaction execution perspective, the Regulations also affect documentation and operational controls. Legal teams and compliance officers should ensure that:
- the stabilisation programme is linked to the correct instrument (the defined Notes);
- only the defined stabilising entities (or their related corporations) undertake the stabilising action;
- counterparties are within the permitted categories (section 274 persons or sophisticated investors); and
- trading systems and approvals enforce the 30 calendar day cut-off from the date of issuance.
These are not merely technicalities; they are the conditions that determine whether the stabilising conduct is legally exempt from sections 197 and 198 of the SFA.
Related Legislation
- Securities and Futures Act (Cap. 289) — particularly sections 197, 198, 274, 275(2), and 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. 6) Regulations 2004 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the official text for authoritative provisions.