Statute Details
- Title: Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Notes) (No. 8) Regulations 2004
- Act Code: SFA2001-S146-2004
- Type: Subsidiary Legislation (SL)
- Authorising Act: Securities and Futures Act (SFA) (specifically, section 337(1))
- Commencement: 29 March 2004
- Enacting instrument: Made on 23 March 2004 by the Monetary Authority of Singapore (MAS)
- Key provisions: Section 2 (Definitions); Section 3 (Exemption)
- Covered conduct: “Stabilising action” in relation to specified “Notes”
- Relevant SFA provisions referenced: Sections 197 and 198 (market conduct rules); Sections 274 and 275(2) (categories of persons/investors)
What Is This Legislation About?
The Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Notes) (No. 8) Regulations 2004 is a targeted regulatory instrument. In plain terms, it creates a limited exemption from certain market conduct restrictions under the Securities and Futures Act (SFA) for specific stabilising activities carried out in connection with a particular issuance of subordinated notes.
Stabilisation is a practice commonly used in capital markets. When new securities are issued, market makers or arrangers may take steps to support or maintain the trading price in the immediate aftermath of issuance. The rationale is to reduce volatility and facilitate orderly trading. However, stabilisation can overlap with conduct that market conduct rules are designed to prevent—such as manipulation or misleading price formation. This Regulations bridges that tension by carving out an exemption, but only for narrowly defined stabilising actions and only within strict temporal and participant limits.
Importantly, this is not a general stabilisation regime for all securities. It is an exemption tailored to a specific set of “Notes” and to stabilising actions undertaken by specified financial institutions (or their related corporations). It also imposes a hard stop: the exemption does not apply after a defined period following issuance.
What Are the Key Provisions?
Section 1 (Citation and commencement) provides the legal identity of the instrument and when it takes effect. The Regulations may be cited as the “Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Notes) (No. 8) Regulations 2004” and came into operation on 29 March 2004.
Section 2 (Definitions) is crucial because the exemption depends entirely on whether the relevant conduct fits within the defined terms. Two definitions drive the scope:
- “Notes” means the 10-year fixed rate subordinated notes due April 2014 issued by Korea Highway Corporation for a principal amount of up to US$750 million.
- “Stabilising action” means an action taken in Singapore or elsewhere by Citigroup Global Markets Inc., Deutsche Bank Securities Inc., JP Morgan Securities Ltd, or any of their 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.
From a practitioner’s perspective, these definitions are doing the heavy lifting. The exemption is limited to stabilisation via buying (including offers or agreements to buy) and only by the named institutions (or their related corporations). If a different entity conducts stabilisation, or if the conduct does not involve buying/offer to buy, the exemption may not apply.
Section 3 (Exemption) is the operative provision. It provides that, subject to paragraph (2), sections 197 and 198 of the SFA shall not apply to stabilising action carried out in respect of any of the Notes with respect to either:
- (a) a person referred to in section 274 of the Act; or
- (b) a sophisticated investor as defined in section 275(2) of the Act.
While the text provided does not reproduce sections 197, 198, 274, or 275, the structure indicates that the exemption is conditioned on the counterparty category. In other words, stabilising actions are exempt from the specified market conduct provisions only when the stabilising transactions are carried out with certain types of persons—either those falling within section 274’s category or those who qualify as sophisticated investors under section 275(2).
Section 3(2) (Time limitation) imposes a strict temporal boundary: the exemption does not apply to stabilising action carried out at any time after the expiry of 30 calendar days from the date of the issuance of the Notes. This is a “hard stop” and is likely intended to prevent stabilisation from becoming a continuing price-support mechanism that could undermine market integrity.
Practically, this means that even if the stabilising action is otherwise within the defined participants and counterparty categories, the exemption will fail if the stabilisation occurs beyond the 30-day window. For compliance teams, this creates a clear operational requirement: transaction dates must be tracked against the issuance date, and any stabilising activity after day 30 should be treated as outside the exemption.
How Is This Legislation Structured?
The Regulations are short and structured as a classic subsidiary legislative instrument with a small number of provisions:
- Section 1 sets out the citation and commencement.
- Section 2 provides definitions that determine the scope of the exemption.
- Section 3 contains the exemption from specified SFA provisions, including the counterparty conditions and the 30-day time limit.
There are no additional parts or complex schedules in the extract. The instrument’s brevity is consistent with its purpose: it is a bespoke exemption for a particular notes issuance, rather than a broad framework.
Who Does This Legislation Apply To?
In substance, the Regulations apply to stabilising actions undertaken in relation to the defined Notes. The exemption is available only when stabilising action is taken by Citigroup Global Markets Inc., Deutsche Bank Securities Inc., JP Morgan Securities Ltd, or their related corporations. Therefore, the primary regulated parties are those entities (and their corporate groups) that may engage in stabilisation for this specific issuance.
However, the exemption is also conditioned on the counterparty to the stabilising transaction. Specifically, stabilising action must be carried out with a person referred to in section 274 of the SFA or with a sophisticated investor under section 275(2). This means that even within the named stabilisation participants, the exemption may not cover stabilising trades executed with other categories of persons.
Why Is This Legislation Important?
This Regulations is important because it demonstrates how Singapore’s market conduct framework can accommodate legitimate market practices while preserving investor protection and market integrity. Stabilisation can be a lawful and commercially necessary activity in primary and immediate secondary market contexts. Yet, without a carefully drafted exemption, stabilisation could be treated as prohibited conduct under general market conduct rules.
From an enforcement and compliance perspective, the Regulations provides a clear legal pathway for stabilising activities—so long as the conditions are met. The combination of (i) a narrow definition of the Notes, (ii) a limited set of stabilising institutions, (iii) counterparty restrictions, and (iv) a 30-day cap creates a controlled environment. This reduces ambiguity and helps regulators and market participants distinguish between permissible stabilisation and potentially manipulative conduct.
For practitioners advising issuers, arrangers, or dealing firms, the key practical impacts are:
- Transaction timing: stabilising activity must be completed within 30 calendar days from issuance to benefit from the exemption.
- Participant eligibility: only the named institutions (or their related corporations) are within the definition of “stabilising action.”
- Counterparty eligibility: stabilising trades must be with persons within section 274 or with sophisticated investors under section 275(2).
- Scope limitation: the exemption is tied to a specific notes issuance; it is not a general stabilisation licence.
In short, the Regulations is a compliance “map”: it tells market participants when stabilisation is likely to be treated as exempt from the SFA’s market conduct provisions, and when it is not.
Related Legislation
- Securities and Futures Act (SFA) (Cap. 289) — in particular, sections 197, 198, 274, 275(2), and the regulation-making power in section 337(1).
- Futures Act — referenced in the metadata context of the stabilisation framework.
- Stabilising Act — referenced in the metadata context of stabilisation-related regulatory concepts.
- Legislation Timeline — for version control and to confirm the applicable instrument version as at the relevant date.
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. 8) Regulations 2004 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the official text for authoritative provisions.