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
- Legislation 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
- Regulation Number: SL 113/2004
- Key Provisions: Section 2 (Definitions); Section 3 (Exemption)
- Status: Current version as at 27 March 2026 (per the provided extract)
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”) creates a targeted exemption from specific market conduct prohibitions under the Securities and Futures Act (the “SFA”) for a particular type of stabilising activity in relation to a specific issuance of notes.
In plain language, the Regulations recognise that, in certain circumstances, market participants may need to buy (or agree to buy) newly issued debt securities to help stabilise their trading price after issuance. Such activity can be legitimate in the context of underwriting and market-making, but it would otherwise risk falling within statutory rules designed to prevent manipulation and improper dealing.
This is not a general “free pass” for stabilisation. The exemption is narrow: it applies only to stabilising action carried out in respect of a defined set of “Notes” (Industrial Bank of Korea’s 10-year fixed rate lower tier II subordinated notes due March 2014), only by specified persons, and only within a limited time window after issuance (30 calendar days). It also excludes stabilisation occurring after that period.
What Are the Key Provisions?
1. Citation and commencement (Regulation 1)
Regulation 1 provides the short title and states that the Regulations come into operation on 12 March 2004. For practitioners, this matters when assessing whether a stabilising action was undertaken within the legal framework applicable at the time.
2. Definitions (Regulation 2)
The Regulations contain two critical definitions that determine the scope of the exemption.
(a) “Notes”
“Notes” are defined as the 10-year fixed rate lower tier II subordinated notes due March 2014 issued by Industrial Bank of Korea for a principal amount of up to US$500 million. This definition is highly specific. It means that the exemption is tied to that particular issuance and cannot be extended to other tranches, other maturities, or other issuers.
(b) “stabilising action”
“Stabilising action” is defined 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 to offer or agree to buy the Notes in order to stabilise or maintain the market price of the Notes in Singapore or elsewhere.
Two practice points follow from this definition:
- Geographic scope: stabilising action may be carried out “in Singapore or elsewhere,” so cross-border dealing is contemplated.
- Conduct scope: the exemption covers not only actual purchases but also offers or agreements to buy—important for underwriting arrangements and conditional trades.
3. The exemption from sections 197 and 198 of the SFA (Regulation 3)
The core operative provision is Regulation 3. It states that, subject to paragraph (2), sections 197 and 198 of the Act shall not apply to stabilising action carried out in respect of any of the Notes with either:
- (a) a person referred to in section 274 of the SFA; or
- (b) a sophisticated investor as defined in section 275(2) of the SFA.
While the extract does not reproduce sections 197, 198, 274, or 275, the structure indicates that the SFA contains market conduct restrictions that would otherwise apply to certain dealings. The exemption is therefore conditional on the counterparty category: stabilising action must be carried out with either the specific category of persons in section 274 or with sophisticated investors under section 275(2).
4. Time limitation (Regulation 3(2))
Paragraph (2) imposes a strict temporal cap: the exemption does not apply to stabilising action carried out at any time after the expiry of 30 calendar days from the date of issuance of the Notes.
This is a key compliance requirement. For counsel advising issuers, arrangers, or stabilising agents, the “30 calendar days from issuance” trigger should be treated as a hard deadline. Any stabilising activity beyond that period would fall back within the general prohibitions in sections 197 and 198 (and potentially other market conduct rules), exposing parties to regulatory risk.
5. Formalities and making date
The Regulations were made on 10 March 2004 by the Managing Director of the Monetary Authority of Singapore (MAS). This provides context for the legal timeline, though the commencement date remains 12 March 2004.
How Is This Legislation Structured?
The Regulations are short and structured as follows:
- Regulation 1 (Citation and commencement): sets the short title and commencement date.
- Regulation 2 (Definitions): defines “Notes” and “stabilising action,” which are the two gatekeeping concepts for the exemption.
- Regulation 3 (Exemption): provides the exemption from sections 197 and 198 of the SFA, subject to (i) the counterparty category and (ii) the 30-day time limit.
There are no additional parts or schedules in the extract. The legislative design is therefore “precision drafting”: it relies on carefully defined terms and tightly bounded conditions rather than broad discretion.
Who Does This Legislation Apply To?
The exemption is relevant to market participants who may conduct stabilising transactions in connection with the defined Notes. In practice, this typically includes stabilising agents, underwriters, and their related corporations—particularly those named in the definition of “stabilising action.”
However, the exemption is not simply “for those entities.” It is also conditional on the counterparty and timing. Stabilising action must be carried out with a person falling within section 274 of the SFA or with a sophisticated investor under section 275(2), and it must occur within 30 calendar days from the date of issuance.
Accordingly, a practitioner should treat the Regulations as applying to (i) the specified stabilising actors, (ii) the specified Notes, (iii) the specified counterparty categories, and (iv) the specified post-issuance period. Any deviation in these elements may cause the exemption to fail.
Why Is This Legislation Important?
Although the Regulations are narrow, they address a recurring market practice: stabilisation of newly issued securities. Without an exemption, stabilising purchases could be characterised as prohibited market conduct under the SFA, even if the intent is to support orderly trading and reduce volatility immediately after issuance.
For practitioners, the value of this legislation lies in its compliance utility. It provides a clear legal basis for stabilising activity—so long as the conditions are met. In advisory work, counsel can use the Regulations to structure stabilisation programmes, define permissible counterparties, and set operational controls to ensure trades occur within the permitted window.
From an enforcement perspective, the time limit and counterparty conditions are likely to be focal points. MAS (and other regulators) typically scrutinise stabilisation for potential manipulation. By limiting the exemption to a defined issuance, defined stabilising actors, defined counterparty categories, and a 30-day period, the Regulations aim to balance market functioning with investor protection.
Finally, the cross-border element (“in Singapore or elsewhere”) is significant for international bond issuance workflows. Stabilising activity may occur through overseas desks or counterparties, but the exemption is drafted to accommodate that reality—provided the legal conditions are satisfied.
Related Legislation
- Securities and Futures Act (Cap. 289) — in particular, sections 197, 198, 274, 275(2), and the authorising provision section 337(1).
- Futures Act (as referenced in the provided metadata context)
- Stabilising Act (as referenced in the provided metadata context)
- Timeline (legislation versioning reference as provided in the 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.