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
- Type: Subsidiary legislation (SL)
- Authorising Act: Securities and Futures Act (SFA) (notably section 337(1))
- Commencement: 23 March 2004
- Status: Current version (as at 27 March 2026)
- Legislative Instrument No.: SL 124/2004
- 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. 7) Regulations 2004 (“Stabilising Action (Notes) Regulations”) is a targeted regulatory instrument that creates a limited exemption from certain market conduct rules in the Securities and Futures Act (SFA). In practical terms, it allows specified market participants to take “stabilising action” in relation to a particular bond/notes issuance without triggering the prohibitions that would otherwise apply.
Stabilisation is a common mechanism used in securities offerings to support orderly trading and reduce price volatility immediately after issuance. However, stabilising conduct can overlap with conduct that, in other contexts, may be considered manipulative or otherwise prohibited. This legislation therefore does not repeal the market conduct rules; instead, it carves out a narrow exception for stabilisation activities that meet defined conditions.
Importantly, the exemption is not general. It is tied to a specific set of “Notes” (fixed rate notes due April 2011 issued by SK Telecom Co., Ltd., up to US$500 million) and to stabilising action taken by a specified firm (Credit Suisse First Boston (Europe) Limited) and its related corporations. The exemption is also time-limited, ceasing to apply after a defined post-issuance period.
What Are the Key Provisions?
1. Citation and commencement (Regulation 1)
The Regulations may be cited as the “Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Notes) (No. 7) Regulations 2004” and come into operation on 23 March 2004. For practitioners, this matters when assessing whether stabilising activities were conducted within the legal framework applicable at the time.
2. Definitions (Regulation 2)
Regulation 2 sets the boundaries of the exemption by defining two core terms:
- “Notes” means the fixed rate notes due April 2011 issued by SK Telecom Co., Ltd. for a principal amount of up to US$500 million.
- “stabilising action” means an action 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.
These definitions are crucial: the exemption is available only for stabilisation activities that fall squarely within the defined issuer, instrument, and actor. If a different entity conducts stabilisation, or if the instrument is not within the defined “Notes,” the exemption would not apply.
3. The exemption from sections 197 and 198 of the SFA (Regulation 3(1))
The heart of the Regulations is Regulation 3. Under Regulation 3(1), 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 stabilisation by:
- a person referred to in section 274 of the SFA; or
- a sophisticated investor as defined in section 275(2) of the SFA.
While the extract provided does not reproduce the text of sections 197 and 198, the structure indicates that those sections impose prohibitions or restrictions relevant to market conduct (often including rules against certain forms of misleading or manipulative dealing). This exemption therefore functions as a “permission” mechanism: stabilising action that would otherwise fall within the scope of those prohibitions is carved out, but only when the stabilisation is carried out in dealings involving the specified categories of counterparties (persons under section 274 or sophisticated investors under section 275(2)).
4. Time limitation (Regulation 3(2))
Regulation 3(2) imposes a strict temporal boundary: the exemption does 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.
For legal and compliance teams, this is often the most operationally significant condition. Stabilisation programmes must be monitored against the issuance date and the 30-calendar-day window. Any stabilising trades, offers, or agreements to buy outside the window would potentially expose the conduct to the underlying prohibitions in sections 197 and 198 (and potentially other market conduct provisions, depending on the facts).
How Is This Legislation Structured?
The Regulations are short and structured as follows:
- Regulation 1 (Citation and commencement): establishes the name and effective date (23 March 2004).
- Regulation 2 (Definitions): defines “Notes” and “stabilising action,” thereby limiting the exemption to a specific issuance and specific stabilisation conduct by specified actors.
- Regulation 3 (Exemption): provides the substantive exemption from SFA sections 197 and 198, subject to (i) the type of counterparty (section 274 persons or sophisticated investors) and (ii) the 30-calendar-day post-issuance limit.
There are no additional parts or schedules in the extract, reflecting the instrument’s purpose as a narrow, issuance-specific exemption rather than a broad policy framework.
Who Does This Legislation Apply To?
In scope are stabilising actions relating to the defined “Notes” (SK Telecom Co., Ltd. fixed rate notes due April 2011, up to US$500 million) and stabilising actions taken by Credit Suisse First Boston (Europe) Limited or its related corporations. The exemption is therefore primarily relevant to the underwriting syndicate, stabilising manager, and any related entities that may execute stabilisation trades or enter into offers/agreements to buy.
Additionally, the exemption is conditioned on the counterparties involved in the stabilising dealings. Specifically, the exemption applies where the stabilising action is carried out with a person referred to in section 274 of the SFA or with a sophisticated investor as defined in section 275(2) of the SFA. Practitioners should therefore consider not only who is stabilising, but also who is on the other side of the stabilisation transactions.
Why Is This Legislation Important?
This Regulations is important because it illustrates how Singapore’s market conduct framework balances two competing objectives: (1) preventing manipulative or improper market behaviour, and (2) permitting legitimate market practices that support orderly trading in connection with securities offerings. Stabilisation can be beneficial, but it must be tightly controlled to avoid undermining market integrity.
From an enforcement and compliance perspective, the exemption is deliberately narrow. It is limited to a particular issuance, a particular stabilising actor, specific types of counterparties, and a fixed post-issuance period. This means that firms cannot rely on a general “stabilisation is allowed” assumption; they must verify that their conduct fits within the exemption’s defined parameters.
Practically, the Regulations affects how stabilisation programmes are documented and executed. Legal counsel and compliance officers should ensure that:
- the instrument being stabilised is exactly the defined “Notes”;
- the stabilising trades are executed by the permitted entity or its related corporations;
- the counterparties fall within the categories referenced in section 274 or are sophisticated investors under section 275(2); and
- stabilisation activity ceases no later than the end of the 30-calendar-day period from the issuance date.
Failure on any of these points may remove the benefit of the exemption and increase regulatory risk. Even where stabilisation is commercially justified, the legal permissibility depends on strict adherence to the exemption conditions.
Related Legislation
- Securities and Futures Act (SFA) (Cap. 289): notably sections 197, 198, 274, 275(2), and the regulation-making power in section 337(1).
- Futures Act (as referenced in the legislation metadata context).
- Stabilising Act (as referenced in the legislation metadata context).
- Legislation Timeline (for version control and amendments tracking).
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.