Statute Details
- Title: Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Notes) (No. 7) Regulations 2005
- Act Code: SFA2001-S69-2005
- Legislation Type: Subsidiary legislation (SL)
- Authorising Act: Securities and Futures Act (SFA) (Cap. 289)
- Enacting Power: Section 337(1) of the Securities and Futures Act
- Regulation Number: SL 69/2005
- Citation: Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Notes) (No. 7) Regulations 2005
- Commencement: 8 February 2005
- Status: Current version as at 27 March 2026
- 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 2005 (“Stabilising Action Exemption Regulations”) creates a targeted exemption from certain market conduct restrictions under the Securities and Futures Act (SFA). In practical terms, it allows a specific type of trading activity—“stabilising action”—to occur in relation to a particular bond/notes issuance, without triggering the prohibitions that would otherwise apply.
Stabilising action is a well-known market practice in capital markets. When new debt securities are issued, market makers or arrangers may buy (or offer to buy) the securities in order to support or maintain their market price during the early trading period. Without an exemption, such activity could be characterised as conduct that misleads the market or manipulates price—hence the need for a carefully bounded legal carve-out.
This set of Regulations is narrow in scope: it is not a general stabilisation regime for all securities. Instead, it is an instrument tailored to a specific issuance of “Notes” (described in the Regulations) and to stabilising actions taken by BNP Paribas (and related corporations) within a defined time window after issuance. The exemption is also limited to stabilising actions carried out in respect of certain categories of counterparties/investors.
What Are the Key Provisions?
Section 1 (Citation and commencement) provides the formal citation and sets the commencement date. The Regulations come into operation on 8 February 2005. For practitioners, this matters when assessing whether stabilising trades were conducted within the legal framework at the relevant time.
Section 2 (Definitions) is central because the exemption depends entirely on whether the activity falls within the defined terms. Two definitions are provided:
(1) “Notes”: The Regulations define the Notes as the 5-year floating rate notes due February 2010 issued by Export-Import Bank of Thailand for a principal amount of up to US$150 million. This is a highly specific identification. If the instrument is not the defined Notes, the exemption does not apply.
(2) “stabilising action”: The Regulations define stabilising action as an action taken in Singapore or elsewhere by BNP Paribas (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 definition captures both actual purchases and conditional commitments (offers or agreements to buy), and it expressly covers actions outside Singapore as well.
Section 3 (Exemption) contains the operative rule. It states that Sections 197 and 198 of the Act shall not apply to stabilising action taken in respect of any of the Notes, within 30 days from the date of issue, with two additional constraints:
(a) Counterparty/investor categories: the stabilising action must be taken with either:
- a person referred to in section 274 of the Act; or
- a sophisticated investor as defined in section 275(2) of the Act.
(b) Time limit: the stabilising action must occur within 30 days from the date of issue. This is a classic feature of stabilisation exemptions: it permits early market support but limits the duration to reduce the risk of prolonged price influence.
From a compliance perspective, Section 3 is best read as a three-part test: (i) the instrument must be the defined Notes; (ii) the conduct must be “stabilising action” as defined (including the actor being BNP Paribas or its related corporation, and the purpose being stabilisation/price maintenance); and (iii) the trades must occur within 30 days and be conducted with the specified categories of persons (section 274 persons or sophisticated investors). If any element fails, the exemption does not operate and the underlying prohibitions in Sections 197 and 198 may apply.
Although the extract does not reproduce Sections 197 and 198 themselves, the legislative technique is clear: the Regulations do not repeal or amend the prohibitions; they carve out a defined exception. Practitioners should therefore treat the exemption as conditional and interpret it strictly, consistent with how exemptions from regulatory prohibitions are typically approached.
How Is This Legislation Structured?
The Regulations are structured as a short instrument with three provisions:
- Section 1 sets out the citation and commencement.
- Section 2 provides definitions that determine the scope of the exemption.
- Section 3 sets out the exemption from Sections 197 and 198 of the SFA, including the time window and the permitted counterparty categories.
There are no additional parts, schedules, or procedural requirements shown in the extract. The legal effect is therefore concentrated in the definition of the Notes and stabilising action, and in the conditional exemption in Section 3.
Who Does This Legislation Apply To?
The exemption is relevant to market participants involved in the issuance and trading of the defined Notes—particularly BNP Paribas and its related corporations, because the definition of “stabilising action” is actor-specific. However, the exemption’s practical impact may extend to other parties indirectly (for example, counterparties who transact with BNP Paribas during the stabilisation period), because the exemption is conditioned on the identity/category of the counterparty.
Section 3 limits the exemption to stabilising actions taken with either (i) persons referred to in section 274 of the SFA, or (ii) sophisticated investors under section 275(2). Accordingly, the exemption does not operate freely for trades with retail investors or other categories not captured by those provisions. A practitioner should therefore verify the counterparty classification under the SFA framework when advising on stabilisation trades.
Why Is This Legislation Important?
This Regulations instrument is important because it provides legal certainty for a regulated market practice—stabilisation—while still preserving the integrity of market conduct rules. By carving out stabilising action from Sections 197 and 198 (within strict boundaries), the law enables issuers and arrangers to support orderly trading in the immediate post-issuance period.
For practitioners, the key value lies in the precision of the exemption. It is not a blanket permission to stabilise any security. Instead, it is tied to:
- a specific bond issuance (issuer, tenor, maturity, and maximum principal amount);
- a specific stabiliser (BNP Paribas and related corporations);
- a specific conduct type (buying, offering, or agreeing to buy for stabilisation/price maintenance);
- a specific time window (within 30 days from issue); and
- specific counterparties (section 274 persons or sophisticated investors).
From an enforcement and risk-management standpoint, these constraints reduce the likelihood that stabilisation activity becomes a vehicle for prohibited market manipulation. They also create clear compliance checkpoints: counsel and compliance teams should document the issuance date, confirm the Notes’ identity, ensure the stabiliser is within the defined corporate group, verify the purpose and nature of trades, and confirm that counterparties fall within the permitted categories.
Finally, because the Regulations are “current version as at 27 March 2026” but were made in 2005, practitioners should still check the legislation timeline when relying on the instrument. The extract indicates the current version is the same as the original (dated 8 February 2005), but in practice, version control matters when advising on historical trades or ongoing compliance.
Related Legislation
- Securities and Futures Act (Cap. 289) — in particular:
- Section 197 and Section 198 (market conduct prohibitions from which the exemption applies)
- Section 274 (persons referred to for the counterparty condition)
- Section 275(2) (definition of “sophisticated investor”)
- Section 337(1) (authorising power for making such exemptions)
- Futures Act (listed in the metadata as related context for market conduct regulation)
- Stabilising Act (listed in the metadata; relevant conceptually to stabilisation frameworks)
- Timeline / Legislation timeline (for version verification)
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 2005 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the official text for authoritative provisions.