Statute Details
- Title: Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Notes) (No. 7) Regulations 2004
- Act Code: SFA2001-S124-2004
- Legislation Type: Subsidiary Legislation (SL)
- Authorising Act: Securities and Futures Act (SFA) (notably section 337(1))
- Commencement: 23 March 2004
- Current Version Status: Current version as at 27 March 2026 (per the legislation portal status)
- Key Provisions: Section 2 (Definitions); Section 3 (Exemption)
- Regulatory Authority: Monetary Authority of Singapore (MAS)
- Regulation Number: SL 124/2004
What Is This Legislation About?
The Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Notes) (No. 7) Regulations 2004 is a targeted regulatory instrument. In plain terms, it creates a limited exemption from certain “market conduct” rules in the Securities and Futures Act (SFA) for stabilising activities carried out in relation to a specific bond/notes issuance.
Stabilising action is a practice commonly associated with securities offerings, where an intermediary may buy (or arrange to buy) securities shortly after issuance to help maintain orderly trading and reduce excessive price volatility. However, stabilisation can also raise market integrity concerns—particularly if it is not tightly controlled or if it extends beyond the period that is necessary for stabilisation.
This set of Regulations therefore balances two policy goals: (1) allowing legitimate stabilisation to support an orderly market for the notes, and (2) preserving the SFA’s broader prohibitions on conduct that could distort market prices. The exemption is narrow: it applies only to stabilising action in respect of defined “Notes” and only during a defined time window, and it excludes stabilising action after the stabilisation period ends.
What Are the Key Provisions?
1. Definitions (Section 2)
The Regulations define two central terms: “Notes” and “stabilising action”. The “Notes” are not generic; they are precisely identified as “fixed rate notes due April 2011 issued by SK Telecom Co., Ltd. for a principal amount of up to US$500 million.” This specificity is crucial for practitioners: the exemption is issuance-specific and does not automatically extend to other tranches, other maturities, or other issuers.
The definition of “stabilising action” is also tightly framed. It refers to actions taken in Singapore or elsewhere by Credit Suisse First Boston (Europe) Limited (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. This means the exemption is linked to a particular stabilising actor (Credit Suisse First Boston (Europe) Limited and its related corporations) and to a particular purpose (stabilising or maintaining market price).
2. Exemption from SFA market conduct provisions (Section 3(1))
Section 3(1) provides the operative exemption. It states that, subject to paragraph (2), sections 197 and 198 of the Act shall not apply to any stabilising action carried out in respect of the Notes with respect to stabilising dealings involving either:
- a person referred to in section 274 of the Act; or
- a sophisticated investor as defined in section 275(2) of the Act.
From a practitioner’s perspective, this is a conditional exemption. The exemption is not a blanket permission to stabilise with any counterparty. Instead, it is limited to stabilising action that involves particular categories of counterparties recognised under the SFA framework—namely persons within section 274 and sophisticated investors under section 275(2).
While the text provided does not reproduce sections 197, 198, 274, or 275, the structure indicates that sections 197 and 198 are the market conduct provisions that would otherwise restrict or prohibit certain dealing practices. The exemption therefore functions as a carve-out: stabilisation that meets the defined conditions will not be treated as falling within the prohibitions (or other regulatory consequences) attached to those sections.
3. Time limitation: stabilisation period of 30 calendar days (Section 3(2))
Section 3(2) imposes a hard stop. Paragraph (1) “shall not apply to any 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 is one of the most important practical elements of the Regulations. It means that even if the stabilising actor, the Notes, and the counterparty category all match the exemption, the exemption ceases to apply after the 30-day period. Stabilising action after that period may therefore revert to the default position under the SFA—potentially exposing the stabilising parties to regulatory action or enforcement risk if the conduct would otherwise breach sections 197 and 198.
4. Scope and compliance implications
Although the Regulations are short, their compliance implications are significant. A lawyer advising an issuer, a dealer, or a stabilisation agent would typically treat this as requiring careful documentation of:
- the identity of the Notes (issuance-specific, including the defined maturity and principal amount range);
- the identity of the stabilising entity (Credit Suisse First Boston (Europe) Limited or its related corporations);
- the purpose of the dealing (stabilise or maintain market price);
- the counterparty category (section 274 persons or sophisticated investors); and
- the timing (within 30 calendar days from issuance).
Failure in any one of these elements could mean the exemption does not apply, and stabilising trades could be treated as regulated conduct under the SFA rather than exempt stabilisation.
How Is This Legislation Structured?
The Regulations are structured in a conventional, minimal format for a targeted exemption instrument:
- Section 1 (Citation and commencement): sets the short title and provides that the Regulations come into operation on 23 March 2004.
- Section 2 (Definitions): defines “Notes” and “stabilising action” with high specificity, anchoring the exemption to a particular issuance and a particular stabilisation actor and purpose.
- Section 3 (Exemption): contains the operative carve-out from SFA sections 197 and 198, conditioned on counterparty category and limited by a 30-calendar-day stabilisation period.
Notably, the Regulations do not include extensive procedural requirements in the extract provided. Instead, they rely on the conditional structure of the exemption itself—meaning that compliance is largely a matter of fitting the facts within the defined parameters.
Who Does This Legislation Apply To?
The Regulations apply to stabilising action in respect of the defined “Notes” when carried out by the defined stabilising actor (Credit Suisse First Boston (Europe) Limited or its related corporations). In practice, this means the exemption is relevant primarily to the dealer group responsible for stabilisation and to any parties that participate in stabilising dealings with the relevant counterparty categories.
However, the exemption is also conditional on the counterparty. It applies only where the stabilising action is carried out with a person referred to in section 274 of the SFA or with a sophisticated investor under section 275(2). Therefore, even if stabilisation is otherwise within the defined Notes and actor scope, the exemption may not apply if the stabilising trades are executed with other categories of counterparties.
Why Is This Legislation Important?
For practitioners, the importance of this Regulations lies in its role as a narrow legal permission within a broader market integrity regime. Stabilisation practices can be legitimate and market-supportive, but they are also capable of distorting prices if conducted improperly or for too long. By carving out stabilising action from specific SFA provisions, MAS provides a controlled pathway for stabilisation—while simultaneously limiting the exemption to prevent abuse.
The 30-calendar-day limit is particularly significant. It creates a clear compliance boundary. Lawyers advising on stabilisation programmes should treat the issuance date and the calendar calculation as critical. The exemption’s effectiveness depends on timing, and the consequences of trading outside the window can be substantial if the conduct is no longer exempt.
Additionally, the Regulations’ issuance-specific and actor-specific definitions reduce uncertainty but also require careful fact-checking. In cross-border bond programmes, there can be multiple tranches, amendments, or related instruments. The defined “Notes” in this Regulations are fixed rate notes due April 2011 issued by SK Telecom Co., Ltd. up to US$500 million. Any deviation from that description could mean the exemption is not available.
Finally, the counterparty limitation (section 274 persons and sophisticated investors) is a reminder that stabilisation is not only about what is done, but also about who it is done with. A robust legal review should therefore include investor classification and documentation of the counterparty’s status under the SFA definitions.
Related Legislation
- Securities and Futures Act (SFA) (Cap. 289) — particularly sections 197, 198, 274, 275(2), and the regulation-making power in section 337(1)
- Futures Act (as referenced in the platform metadata)
- Stabilising Act (as referenced in the platform metadata)
- 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. 7) Regulations 2004 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the official text for authoritative provisions.